Americans now owe more money on their college loans than they do on credit cards.
I just read about that scary reality on The Wall Street Journal’s website.
According to Mark Kantrowitz, the financial aid guru over at FinAid and Fastweb, Americans owe about $829.7 billion in student loans. In comparison, consumers owe $826.5 billion in revolving credit card debt.
Most of the college loan debt — $605.6 billion — is owed on federal student loans. Private student loans are in a distant, but troubling, second place. These numbers, by the way, don’t include the debt that parents absorb when their kids head to college.
College loan debt is scarier than credit card debt because it can hardly ever be discharged in bankruptcy. The penalties for students, who fall behind with their student loan payments, are nothing short of draconian. You can read heart-breaking stories of student-loan casualties at Student Loan Justice.
Students who take out federal loans are in better shape than those who carry private college debt. I was just telling a friend this week about a fairly new federal program called Income-Based Repayment Plan that can help reduce the student debt burden at least temporarily. There are, however, no magic bullets for students who have overdosed on private loans.
What’s equally frightening, is how heavily college students have been turning to loans recently. Kantrowitz estimates that students have accumulated $300 billion in federal student loan debt in just the past four years.
Here are some posts that I’ve written recently on college loans: