Jul 10, 2013 Philip Burgess
With the cost of college increasing nearly every year, Americans are seeing student debt loads reaching record levels.
As consumers take on more debt, the risk of falling short on other essential expenses becomes higher. During these times, short term lenders can be beneficial, as these funds can help people make ends meet.
Interest rates on government-backed student loans have increased from 3.4 percent to 6.8 percent, which may significantly alter the amount of debt college students will owe after graduation.
In fact, according to the Pew Research Center, an estimated 7.4 million will be impacted, with each taking on an additional $2,600 in debt each year for the next decade.
Should students ever fail to make a payment or pay late, their consumer credit scores can take a hit. As a result, it might be difficult to obtain traditional forms of financing.
If too many graduating college students see their scores fall, short term lenders could see a pick up in demand, as these financial institutions use alternative credit solutions to approve applications.