Over the next decade, federal student loan debt is set to generate a profit of $185 billion from students and their families as they struggle to pay off their college debt. If the profit remains consistent through 2023, the government’s student loan program will meet Fortune magazine’s annual list of the world’s 500 biggest companies among the top 20. With this summer’s rate increase, the profit margin is predicted to go up by more than $700 million.
Students and families would see short-term savings with loan interest based on the government’s borrowing cost. As the economy improves, interest rates will rise. Students will be spending more on interest in as early as 2016. Since student loan debt payments will last for decades, the initial savings will be overrun by decades of high interest.
This estimated rise in interest is setting students and families up for an increased burden of government debt. A college education should be an affordable cost for anyone who wants to earn their degree. This was the idea behind the start-up of student loans in the first place. It is imperative that people get serious about finding ways to decrease student loan debt.
With over $1 trillion in college loan debt, the government should be looking at ways t address the problem rather than quickly passing through a bill to increase profit. The Consumer Financial Protection Bureau has set its sights on education future students who use federal loans. It is important for student s to understand the relief programs which are already set in place to make student debt more affordable. This information will help to prevent students from falling into debt problems fresh out of school. When you are 18, a 6 month grace period seems like a great opportunity to get ready to pay the first payment. When graduation comes and the same student now has 4 years of loans to make payments on, 6 months flashes by in a blink of an eye. Federal loan programs will help make the transition in to the ‘real’ world more financially friendly.
The good news is that this new bill will bring immediate help and there is nothing set in stone about it. Government officials could reevaluate the bill at a later date in order to address the student loan debt crisis. Young households need to afford living costs, save for their future and build their family’s security through investment rather than working to pay off college debt.
Right now, the new bill passed this summer is not bad for students. It takes care of the here and now giving student debt relief support from lower interest. If Congress does not revisit this problem at a later date, students will see the same effects as credit card holders who apply for ‘zero’ interest cards. They enjoy the interest free introductory rate then wonder why they can’t afford to pay down their bill once the higher interest rate is attached to their purchases 6 months to a year later.
One thing is for certain, the bills will come. Students will have to find a way to solve their monthly burden of paying towards their college debt. Student debt services are geared up to help average people find government backed programs to save on the student loan debt problems and ease the financial burden for decades to come.
