Student loan debt crisis: All the fun facts revealed

The U.S is about to face yet another financial cliff and that is its ever growing student loan debt. As of 2013, it has already surpassed $1 trillion and counting.

If you’re interested to find out more about the student loan debt crisis, then you may read along the remaining article.

A. Debt larger than many nations – Presently, over 40 million citizens hold student debt. The population of student debtors is more than the entire population of countries like Canada, Australia, North Korea and 200 other countries. Moreover, its almost four times higher as compared to the population of Sweden.

B. Greater source of revenue – Suppose, the Federal Government was a private corporation, then it would have been the most profitable one in the world. As per the Congressional Budget Office’s estimates, the U.S Federal Government earned almost $50 billion from student loans in 2013 alone. Its revenue is $5 billion more than ExxonMobil, the recently adjudged most profitable country in the world

C. Have licenses suspended – Even if you’re employed and aren’t looking for a job presently, then also you may lose the one you are earning your livelihood from. In case, you default on your student loan payments, then you are very likely to get stripped off any professional license that you may be holding. There’s a state where you could have your driver’s license suspended as a punishment for defaulting on your student loans. For example, in 2011, nursing licenses of 42 nurses in Tennessee were suspended because they defaulted on their student loans.

D. Student loans could render you unemployable – There are seven million student loan defaulters in the country. This in a way implies that these seven million people will have to suffer from bad credit and be considered as ineligible for many jobs as a result, including certain government jobs.

So, you think it just ends with having a bad credit? Hopefully not. This is because your alma mater wouldn’t release your official transcripts to any of your potential employers who may seek to have your credentials verified. Rather, the U.S Department of Education (DOE), basically eggs schools to hold back transcripts of those students like you who’ve defaulted on their education loans.

A lot of jobs today ask for the official transcripts and so, it definitely makes the going tougher to get a better-paying job and to pay back your student loan debt, at a time when your alma mater is holding them for ransom.

E. Student debtors cannot file bankruptcy – As per the Bankruptcy Code, business houses can file for bankruptcy protection, but being a student debtor you aren’t. For instance, Freedom Industries, the chemical manufacturer allegedly responsible of West Virginia drinking water contamination, had in the recent past filed for Chapter 11 bankruptcy protection.

Currently, this company is battling 25 lawsuits, however, after legally declaring insolvency, it is about gain relief from most of the litigations. Unluckily, as a student debtor of this country, it is next-to-impossible for you to file for bankruptcy. Surprisingly, debts due to gambling or any other consumer debts are dischargeable under bankruptcy but not your education loans.

Your debts can keep growing when you fail to pay them back on time, and can even harass your relatives in your absence. Lenders are having a field day ever since the bankruptcy protection was dropped from student loans. From a leaked memo, it was found out that Sallie Mae’s second-most important goals is to keep student loans as non dischargeable debt under bankruptcy.

Description:Student loan debt is more than the total credit card debt in the country. It is a secured debt and so, student borrowers cannot recieve a discharge from it under bankruptcy. Defaulting on them can bring a lot of trouble to the borrowers like damaged credit, ineligibility for employment, suspension of licenses, reduced or no government-backed benefits, wage garnishment and a host of other penalties.

Interest rates on student loans continue to rise and going by the recent bipartisan deal, the U.S Congress agreed to let them double-up from a previous cap of 3.4 percent to 6.8 percent. However, it was a short-lived legislation that was followed by an equally, if not better, agreement and that is, rate of interests on student loans will vary. This implies that such loans will have variable interest rates that would only increase, particularly with further improvements in the U.S economy. As per the estimates of the experts, student loan interest rates might be over 6.8 percent by 2015.

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