Student loans have been advertised as the sort of debt that will always yield a return on investment. However, as the housing bubble showed, “good debt” isn’t always as reliable as it sounds.
Experts fear an ever-accelerating cycle of default rates, tuition hikes, unemployment and unprecedented student debt could emerge as a financial mire for members of Generation Y.
According to an October report from the independent group The Education Sector titled, “Affordable at Last: A New Student Loan System,” the amount that students borrow to finance postsecondary education has grown “by every available measure” during the last 15 years. For example, between 1993 and 2008, the percentage of bachelor’s degree recipients who borrowed for their education grew from 49 percent to 66 percent, with average total debt at graduation increasing more than 50 percent.
The underlying policies that make up the system are overly complicated and little understood by the average undergraduate, simultaneously entering adulthood. Young adults who anticipated a brighter future are now clamoring for relief.
The crisis resembles the recent collapse in home mortgages.
“With the investment in housing, as the prices were going up they did not see the downside—they didn’t see
Read More from the Article Source: Full Article
