Student Loan Debt in the U.S
Education is considered by many as one of the best road out of the poverty. The entire years of education during the college years combined with the possibility of expanding your network is a great way for the student below the poverty line to advance numerous steps on the economic ladder. In order to fulfill their American Dream, a student will apply for a student loan to support his education. Unfortunately after college, it is pretty challenging for the millennial students to keep up with their debt. Statistics shows that at least 2/3 of the students that are graduating from their 4-year course have a long term debt; car payment, home mortgage, and student loan.
Detailed Statistics about the Disturbing College Debt
Study shows that college students are struggling to repay their loan from the institution that is designed to protect and uphold their rights. Study shows that even the high-income earners are having trouble to pay off their debt. 34% of the graduated students who are earning an average annual household income of $75,000 doubt if they have the capacity to pay off their debt. Even after a long years after they graduated, the amount of millennials that are stuck with their college debt remain in a significant level.
Aside from the outstanding loan debt, the 52% of the graduating students also have the tendency to have a short-term debt with them particularly from their credit cards. This type of debt can be more costly as the standard credit debt has an interest rate of 21%. The graduating students who incurred a debt over their credit card said that they carried over their interest where they received an extra interest charged such as 22% late fees, 13% OTL (over the limit) and 14% interest for the cash advance.
Graduated students are exhausting all their resources in order to settle their student loan. Some of them are utilizing their retirement and bank account. 29% of them are claiming that they occasionally withdraw from their bank account, and 22% used their retirement account. Over the last 8 years, the outstanding student loan debt has increase for about more than 300%. Around 38 million individuals in America have this type of debt.
College Financial Aid and Pell Grant Assistance
Families who have a total household income that is below $40,000 who are receiving the Pell Grant have a higher chance to make a loan again. For the graduating students, 88% of the senior who received Pell Grant has applied for a student loan last 2012. Around 53% graduating student who are not receiving the Pell Grant also have debt.
While the statistics shows that the millennials are greatly affected by these alarming debt statistics, we should be aware that the next generation of our college student will not be prepared for this challenge. On a separate research, the millennial has given them a high remark when it comes to the financial management. But unfortunately, only 8% of the graduating student population has the capacity to pay back their student loan debt.