Outstanding Student Loan Debt to Hit $1 Trillion Before End of 2011
With that much money, Loop 21 shows you what you can buy
Until recently, experts predicted that student loan debt would reach $1 trillion around June 2012. Now, according to USA Today, we're just $50 billion (and two months) short of reaching this epic mark.
For generations the U.S. government made provisions to educate its citizens. Authors and experts on the Millennial generation, Mike Hais and Morley Winograd, who co-authored the book "Millennial Momentum," explain:
"In the 18th Century it was the provision in the Northwest Ordinance and by many states, to provide land for schools and at least an elementary school education for young people. In the Civil War era, the federal government established Land Grant Colleges. In the 20th Century it was free high school education for both girls and boys and later the G.I. Bill and National Defense Education Act that opened college and graduate school to millions more young Americans. Starting with Generation X and now with today's Millennials, this is the first time that America has backed off of this pledge. This is obviously a bad and painful policy for today's young people as individuals and it is damaging to the country's long term prospects. Changing this damaging policy may be the most important thing the U.S. needs to do if it is to fully compete in a 21st Century world."
It is difficult to comprehend the magnitude of this country's student loan debt (and unemployment, bad credit, incomplete education, etc. only make the crisis worse), but here's what $1 trillion can buy:
66 years of U.S. military air conditioning expenses
The U.S. government spends over $15 billion a year on air-conditioning in Iraq and Afghanistan. That means $1 trillion buys 66 years of air conditioning costs in our current war zones.
U.S. wars since 2001
October 7 marked the 10th year of the U.S. war in Afghanistan and to date the cost of all U.S. military wars since is an estimated $1.3 trillion and growing every day.
College Tuition at Harvard University for 18,993,352 people
Already 60% of Harvard undergraduates receive some financial aid but that hasn't stopped the prestigious university from raising it's annual tuition by 3.8% to $52,650.
In 2005, Bush signed The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), which made it impossible for borrowers to discharge their private loans. In some cases, borrowers don’t even escape debt when they die, and receive letters from their lender even after they are deceased.
On September 12, 2011, the Department of Education released the official FY 2009 national student loan cohort default, and confirmed that the rate “has risen to 8.8 percent, up from 7.0 percent in FY 2008.” (Default rates, incidentally, are much higher among students who attend for-profit institutions). The Department, much like the Obama Administration, seems to have few solutions to solve the crisis. For example, U.S. Secretary of Education Arne Duncan has stressed the importance of protecting Pell Grants. However, the protection of Pell Grants does not address the tens of millions of borrowers, who have graduated or dropped out of school, and are drowning in debt.
How do those who are struggling with the debt feel about the value of their education?
Melissa Webster, 42, and a native of Alabama, attended school on and off for 10 years. In 2005, she graduated with a Bachelor of Arts degree in communications.
"Two-thirds of [my student loan debt] is interest because I didn't make enough money to afford the payments to pay the loans back," says the mother of two. "I've had to keep them in forbearance since I graduated, and had to consolidate the interest into actual principle to prevent garnishment at one point before President Obama and Congress passed the Affordable Care Act."
Webster has struggled to find a job in advertising after she was laid off from a full-time position in 2009. She's had lots of time to think about what she would have done differently instead of taking out student loans.
"I'd put the money into a credit union low-interest savings account and live on it for several years, so I could focus on building a writing career without having to worry about paying for basic living expenses. Once you cut the cost of living down to nothing, it's amazing what you learn to live without. I'd love to say I'd put it towards my kids' college, but it wouldn't even make a dent, so what's the point?"
Her son recently graduated from the University of Alabama. Her son was fortunate, she says, he received scholarships and does not have a lot of debt. However, she added, “he's still working at Cracker Barrel to pay off the loans until he goes to graduate school next fall.”
When asked if she regrets going to college, Webster had this to say:
"Yes, I regret going to college. The cost of college isn't offset by actual wages upon graduation or better employment. Before thirty years ago, it was a standard part of a benefits package for companies to reimburse college expenses and pay off any loans, as well as pay wages that reflect education. Now, companies still require the education as a prerequisite to employment, but give no benefits, and only pay poverty wages if you're lucky enough to get hired in your field. On top of that, companies no longer train employees and only want experienced applicants they can pay poverty wages to. So, the education is meaningless any way you look at it, and you just get stuck with massive debt you can't pay back."