Between 1996 and 2008 the Pew Research Center reported that the numbers of college students dependent upon student loans have dramatically growing. The data survey collected by the U.S. Department of Education is the analyzing data for the quadrennial National Postsecondary Student Aid Study which examined the borrowing trends among college graduates in the year class 2008 and made the correlation using the inflation-adjusted dollars.
The Pew analysis wholly revealed that recipients in 2008 who took up bachelor’s degree borrowed on standard 50 percent more in student loans than those bachelor’s recipients who graduated in the year class 1996; meanwhile, associate’s degree students in 2008 borrowed more than twice in the latter year. And the report signifies that there are three important factors driving the mounting use of student loans:
- A larger part of college students are taking out student loans.
- The amount borrowed by college students are getting bigger.
- More of these college students are attending for-profit colleges in which the student loan debt is highest and most widespread.
According to the USA Today student news, the government gives warning to sue people who have defaulted to get their student loans money back. For the possible legal action the Education Department has referred to Justice Department lawyers, for the number of loan defaults have been rising in which in fact almost doubled the number from 2009 up to 2010. The Education Department figures show regarding the referrals were 918 referrals in 2006 then increased to 2,596 in 2009, and then last year 5,393 referrals.
The most recent figures of Education Department show that there are 238,852 in default out of 3.37 million student loan borrowers from the federal fiscal year of 2006 through 2008. The government only wants the loans repaid, that is why the Education Department spokeswoman stated, “Suing to collect the debt is a “last resort step,” and added, “Borrowers can work on repayment plans ranging from deferments to extended grace periods. We try to do everything possible to come up with a repayment plan before taking the step of seeking a lawsuit.”
Isn’t this threatening to the borrowers? That is why being a borrower you need to be responsible to whatever you owe. More to this if the government does sue, the parents will be held responsible for their children’s credit if they approved and co-signed the loans, and the wages and bank accounts, put liens on people’s property. But for now the Education Department has temporarily stopped going after for the default loans through the Justice Department of less than $45,000. However that doesn’t mean that borrowers who have defaults are settled, bad loans are handled by private law firms on a contract basis.
“What people need to realize: Once you default on a student loan, you owe that money forever. If we get a settlement, we can place a lien against your house. You can’t refinance or sell the house unless you clear up that debt. We get a lot of loans repaid when a house is sold.” Alabama’s Kelly says.