Dec 13, 2012 Philip Burgess
The New York Federal Reserve has published a report that shows that the total amount of student loan debt in the United States stands at nearly $100 billion. The average student loan amount carried is over $20,000. These numbers alone are not unbelievably startling, but the data also shows that over 11 percent of these loans are more than 90 days delinquent. Students face rising tuition costs, more than 5 percent on average from 2006-2010, according to Money News. On the other hand, earning for graduates in their mid-20s to mid-30s has fallen nearly 2 percent in the same span. This data suggests that students are paying more for school, and taking out loans that may be difficult to pay back due to the weakening economy and the decrease in average pay. This is likely to damage consumer credit reports, and may lead to individuals seeking out alternative credit, such as short term loans or eschewing high cost investments such as home and auto loans. New legislation
New legislation has been proposed and will be heard before Congress regarding the mounting student loan crisis, according to Business Insider. One solution is based on a British model, in which payments are taken directly out of workers' paychecks in proportion to the total loan. This could help recent grads better balance their money, but at the same time, it may further burden individuals, disallowing them from making payments on rent or credit card debt. This legislation might also be damaging to collectors, as it would essentially bypass the process in which debts are acquired by third parties.