Recently student’s loan is in news for number of issues especially its political significance, the higher rate of interest, the education institutions making profit out of it and the students who don’t have other source but to opt for it to pursue their dreams.
The Federal Reserve Bank of New York, has brought about staggering figures, it shows that as much of 37 million Americans are under student loan debt that amounts to be total of around $870 billion. It has been found that the annual default rate had risen to approximately 8.8 percent in 2009 and much more in 2012 which was around from 6.7 percent in 2007.
Even the interest rates are expected to be increased to almost double to 6.8 per cent from previously 3.4 from July 1 this year.
The situation is quiet difficult as when a student is out with degree he or she already in high debts. Being in debt immediately after college is supposed to be very miserable situation for students and hence leading to bankruptcy.
Students Loans and Education institutions:
As the high fees structure of the universities and colleges is one of the biggest reasons that are forcing students to opt for loans and that too at a very high rate. In 2009 only 5.2 per cent from private institutions and around 4.5 non-private institutions opted for loans but now after four years there is significant increase in students opting for it.
Political play with Students Loan policy:
As we all know that soon the elections are due in later this year, all the political parties are using the hot issues to gain popularity. Student loan is one of such issue that has been brought into light recently. The players are in favor of establishing protective laws for the students. As the present conditions is quiet burdening for them. As per a law passed in 2005, that supports the lenders, as by which if student is not able to pay back will be eligible for fines and punishments.
Obama government has already turned out with special protection plan that will help for reasonable paying back options like income based repayments or the public service loan forgiveness plans.
Other Measures for secure loans:
As with the increasing bankruptcy situations now the loans should be assigned to those who are capable of reverting it back. The lenders should properly calculate the repayment capability and also determine the payback time.