US Government faces Increasing Rate of Student Loan Default
As the economic crisis hits United States, many individuals, professionals, parents and students alike are affected by the said crisis.And as it strikes US economy, recent college graduate’s student loan default is increasing from 5.2 percent last year to 6.9 percent. This figure only shows the continuous struggle on the financial status of the students and the parents. Because of the economic downfall they cannot be able to pay their student loans and paying student loans is not the first thing in their list because of the many financial needs by the family or each individual said Robert Shireman, senior adviser to Secretary of Education Arne Duncan.
He was also expecting this kind of problem since the economic crisis occurs. Mr. Shireman said that the Department of Education thinks of a possible ways to notify the borrowers about the default. These alternatives may help the borrowers pay their student loan in smaller amounts until the whole amount will be paid off.
Education Department also disclosed that the default under the program where US government pays the subsidies to private lenders to make student loans is much higher than the program where the government lends directly to parents and students. It shows that the direct loan program default rate is 5.3 percent compared to 7.3 percent rate default in private lenders.
With this kind of situation it only shows that the economic catastrophe has influenced all sectors of the country. Student loans indeed help students and parents in supporting education yet paying the student loans is another dilemma to face after graduating especially at this time of crisis.
It might be difficult for parents or even the government to find solution to this problem but in this situation it needs a fast answer to make a way out from raising the default rate of student loans.
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Students should just look for jobs outside the US. This is a lost generation. It is deep in debt and the US government won’t bail out anyone who isn’t rich or a baby boomer.