Private & Federal Student Loan Debt Crisis: Decades in the Making
While borrowers of all ages are interested in taking out student loans today, undeniably the most concerning age group is the 20- to 30-year-old range, due to their lack of expertise in understanding how a household budget works—much less handling an average payment of around $400 a month to loan servicers.
Over the years, as student loan debt has escalated into the trillions for over 45 million borrowers, causes for such a financial crisis emerging from the educational system have been under intense scrutiny. While the need for better counseling and improved decision-making on the part of borrowers plays an obvious role, learning institutions have been targeted as the main issue due to continued, rising tuition. In recent decades, enrollment to colleges has increased tremendously; in fact, by the time the Great Recession hit, recent news cites data showing that for-profit universities were on their way to an enrollment increase of 329 percent by 2000.
“In the early 2000s, the Bush administration made it a lot easier for online education to grow,” said David Deming, professor of public policy at the Harvard Kennedy School and the Harvard Graduate School of Education. “And that affected a lot of large for-profit institutions that expanded their enrollment by several orders of magnitude in the mid-2000s.”
“Many states made massive cuts to funding at public universities. This caused many of these schools to raise tuition in order to recoup the lost revenue. As the labor market weakened, more and more workers looked to higher education as a lifeline. Public and private college enrollments spiked, and many were forced to turn students away. For-profit colleges welcomed those students with open arms,” said Deming. “At its peak, the for-profit sector accounted for a little bit more than 10% of all enrollment, but about a quarter of Pell Grants, about a third of student loans and more than half of defaults.”
While educational costs were much less and funding was higher up until the last few years, students enjoyed the perks of getting an education without as much accompanying financial burden. Today, however, funding is still substantially lacking in comparison to before 2008. Students continue to take out sometimes massive amounts of loans, however, and are not prepared to pay them back later—or cannot, upon not realizing the career and income of their dreams right away.
Have you experienced problems with your loan service provider or student loan program, or are you in danger of defaulting on your student loan? Contact Fitzgerald & Campbell, APLC now so one of our experienced student loan debt attorneys can review your case and discuss all the available options with you. Our attorneys have decades of experience in serving clients as they navigate through challenging financial situations, to include student loan issues, bankruptcy, and other debt management processes. We are here to help! Click here to schedule a free 30-minute consultation, call us at (855) 709-5788, or email us at email@example.com.
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