America's Student Loan Debt Bondage - by Stephen Lendman
Entrapping students in debt for life.
Higher education today isn't like it used to be. US students face crisis conditions. Washington and lenders wage financial war on them. In addition, dozens of budget-strapped states cut funds to public colleges and universities.
Students are directly impacted by sharp tuition hikes (double-digit at some schools) and less financial aid. As a result, many thousands are entirely shut out. Others relying on student loans face permanent debt bondage.
By end of 2011, student loan debt will top $1 trillion. It already exceeds credit card indebtedness. Moreover, in the past year alone, students borrowed over $100 billion, double the amount a decade ago adjusted for inflation.
Borrowing is one thing, repaying another. Therein lies the rub. Many former students end up debt slaves for life. With interest, collection charges, penalties, and other costs, some burdens exceed $100,000, Over their lifetime, they can rise five-fold or more for some.
Repaying graduate school debt pushes it higher. New medical professionals can owe $200,000 or more at first. An unidentified one said he'll pay $1,000 a month for the next 30 years. With higher inflation, monthly costs will rise exponentially.
Many end up trapped for life because debt can multiply five-fold or more over its lifetime. As a result, a new medical professional paying $1,000 a month now may owe $5,000 or more monthly in 30 years, and if obligations aren't repaid, burdens rise annually.
A March 2011 Institute for Higher Education Policy study titled, "Delinquency, The Untold Story" examined repayments from October 2004 - September 2009.
It showed only 37% of student loans are paid on time. Another 15% of students default, 26% are delinquent, 12% use forbearance to temporarily suspend payments, and 11% defer them because of re-enrollment, economic hardship or unemployment. However, doing so increases burdens as interest and other costs rise.
Moreover, default data greatly understate an exponentially rising burden, facing growing numbers of students indebted for life and unable to repay. More on that below.
On September 12, New York Times writer Tamar Lewin headlined, "Student Loan Default Rates Rise Sharply in Past Year," saying:
According to way understated Department of Education data, "8.8% of borrowers overall defaulted in the fiscal year" ending September 20, 2010, "up from 7% the previous year."
According to Institute for College Access & Success and Project on Student Debt program director Debbie Cochrane, "The extent of borrower distress is barely touched upon" by these numbers.
Last spring, the Senate Health Education Labor and Pensions Committee found "some companies estimated their former students had staggeringly high lifetime default rates - in one case, 77.7%."
On November 2, Tamar Lewin headlined, "College Graduates' Debt Burden Grew, Yet Again in 2010," saying: