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  • Alarming consequences of student loan default
  • Posted By:
  • Chris J
  • Posted On:
  • 30-Jul-2012
  • The last decade has seen a six time increase of public college education cost over the inflation rate. As you look around, you will find many college graduates compromising on their lifestyle with cheap apartments and used cars, waiting endlessly for a job that will help them repay their student loan debt.

    There is a ten per cent increase in the volume of student loans in 2012. An alarmingly large number of students continue to finance their tuition by taking out student loans and most of them feel defenceless and unsettled.

    Between 20 and 24years of age, there are over 2 million people in our country with bachelor’s degrees unemployed according to a Pennsylvania Department of Labor and Industry report.

    A person who is unable to pay back their student loan on time faces many consequences including losing eligibility for future federal aid, being responsible for the entire unpaid loan balance, facing legal action and wage garnishment and being unable to purchase or sell any real estate assets.

    The growth of student loan default rate is alarming to say the least. The greatest challenge faced by our nation today is to keep the cost of education low and also increase student achievement.

    Penn State, in its capacity as a land grant institution believes in providing working class families affordable education for their children. In keeping with their mission, in spite of dwindling funding,
    trustees have approved the lowest raise in tuition the institution has levied over the past sixty years for the academic year 2012- 13.

    Students in this college are encouraged to save money wherever they can says David Pearlman, the assistant financial director of Penn State Altoona. He said that the college advises incoming freshmen not to bring their books under the loans as it makes sense to just purchase them.

    Thousands of dollars are being incurred as debt by students. Those who have more than $30,000 in debt in Stafford loans are offered the option of spreading their repayment over 25 years with fixed payments.

    Surveys conducted over the past four years show that lesser number of families are drawing from savings and parent income to fund their tuition. Financial aid director of St. Francis University Jamie Kosh says that rising student costs outmatch Pell grants and other federal sources.

    According to him, more number of students who are in need attend college with Pell grants but the continuously rising higher education costs are not matched by the grant amount. Many families still strongly believe that it is worth investing in college education.

    There was a significant increase in the tuition and fees in the past decade in public four year universities and colleges. This is an average increase of 5.6 per cent a year. Conducted by the College Board, this study shows that tuition increase percentage is higher than the general inflation.

    Escalating cost of higher education has forced many families to consider weighing the value of jobs that require specific skills against the value of a bachelor’s degree. It is a matter of time when an increasing number of families are going to opt for vocational education.


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