College students have to take out personal loans these days with increasing frequency and size to fund their educations. A college education is great to have, but the huge expense that has to be taken on may have led to a rising rate of default. The students profit least from the current system.
Rising tuition costs lead to more personal loans for students
There has been a somewhat unsettling trend at many universities across the nation for years now, which is the rising cost of attending and graduating from institutions of higher learning. It has meant more students have had to borrow some sizable personal loans to get an education. Loan lenders don’t mind it, of course. The lenders of the installment loans that students have to take out to get a college education have to bear in mind that student loan defaults are at about an 11-year high, according to Fox News. Unfortunately, the most common lender that students have to get a loan from is from Uncle Sam, which means that if students take on more debt than they can afford to get an education, it’s the taxpayers who get stiffed.
Billions lost through defaults
Currently, the Department of Education has about $880 billion in federal loans on the books in 2011, and defaults have been on the rise at the same time that costs of tuition and room and board have. From 2005 to 2008, the cost of a year’s tuition and living expenses rose from $28,505 to $30,258. During the last three years, or the period of 2008 to 2011, the amount of loans that were defaulted on rose from $33.5 billion in 2008 to $58 billion in 2011.
College graduates enter unstable work force
Rising costs of tuition are just one of the daunting prospects students face today. More college grads have fewer jobs available to them, and at lower wages. This means that students have to borrow more just to have a smaller chance chance of getting a job — and a smaller paycheck.