“How do I get a student loan?” This is the common question when a student seeks for a financial support for his or her education. Before jumping to a decision, a borrower should distinguish the advantages and the risks that are possible in time. Taking a student loan is not simply getting money, spend it out, and that’s it! Because every penny receives has a corresponding responsibility to pay for.
Student loans are needed to repay with interest; and speaking of the rate of the interest, the variability has become a big issue to many borrowers. College students are protesting because of the ever-increasing interest rate, in which in July, the subsidized Stafford loans interest will make up an approximate 1/3 of all student loan programs that are set to increase twice over from 3.4% to 6.8%.
But U.S. Secretary of Education, Arne Duncan has recently confirmed that “College debt is a Good debt.” But surprisingly, there are over 37 million college borrowers are on burdening how pay back the cost of their education.
The New York Fed reported that in 2012, the overall federal and private student loan debt in the 1st quarter hit roughly 904 Billion Dollars, which increases to 275%matching in 2003 period; on the other hand, according to Consumer Financial Protection Bureau that the statistic has already reached 1 trillion Dollar. These report signified the total amount of student loans held by numerous American borrowers.
In addition to this, 10 years ago it was reported that the rate of delinquency was only 6.13%, but today it sadly reaches up 8.69%, which is higher compared to the delinquency rate of loans in cars and mortgages.
To this consideration, Berkeley’s Robert Reich who was President Bill Clinton’s Former Secretary of Labor called student debt crisis as “the next bubble to burst” and the statement was agreed by William Bennett who was the President Bush Sr. Former Secretary of Education; on the contrary, the current Secretary of Education under President Barack Obama disagreed!
“I don’t see it in the same severe terms. I think when you go to college, and very importantly graduate and when you get the diploma, we can make a very, very good case that that is the best investment you can make.” Duncan said.