Though high levels of student debt grab headlines, how those students will repay the loans has been overlooked.
As Yahoo! Finance noted, default rates on loans stand at only 6 percent, but 36 percent of loans are “in payment jeopardy.”
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“The ease of obtaining such loans rose dramatically when the U.S. government began guaranteeing nearly all student debt in 2010,” and with easier access, risky students could get a large amount of loans.
A large driver of those loans have been for-profit colleges, where students borrow at “drastically higher rates,” according to The Atlantic.
By 2014, in fact, students at for-profit colleges held $229 billion of debt. With the large amounts of debt, 68 percent of students failed to graduate from for-profit colleges within six years.
That translates into students with concerning amounts of debt who lack a degree. Essentially, the costs of an education without the benefit. Without a degree, job prospects are more limited, which leads to lower income, which makes the debt harder to pay off.
The Department of Education, responsible for the loans, has various loan reprieve programs that help students in danger of defaulting. However, any of the loan not paid by the student will cost the federal government. Nor do those programs address the root cause of students who can’t repay their loans incurring high debt.
Even if the federal government can keep default rates down, student loan debt shows no signs of slowing down. Without political pressure to target the problem, the political will remains low.
