Online Staff Report
The College Board — a membership association composed of more than 5,900 schools, colleges, universities and other educational organizations — reports that college students are borrowing twice as much in student loans as they did a decade ago.
Furthermore, as a result of the increase in student loan borrowing, the Federal Reserve Bank of New York reports Americans now owe more in student loan debt than in credit card debt.
According to a USA Today report, college students borrowed more than $100 billion for the first time last year, and the amount of outstanding loans will exceed $1 trillion for the first time in 2011. The report added that in the past five years, total outstanding debt has doubled.
The USA Today report added that student loans pose little threat to taxpayers as Congress has empowered lenders with broad powers to collect on the debt, which cannot be vacated through bankruptcy.
“The credit risk falls on young people who will start adult life deeper in debt, a burden that could place a drag on the economy in the future,” the USA Today report said.
The College Board reports undergraduate borrowing is up 63 percent from a decade ago, with the average full-time undergraduate student borrowing $4,963 in 2010.
Rising tuition costs, an increase in defaults, unemployed workers seeking new training, and online and for-profit universities are likely factors in the increase in student loan debt.
Defaults, or borrowers who are nine months or more behind in payments, rose to 8.8 percent in 2009, up from 6.7 percent in 2007. Meantime, the nation’s largest for-profit school, The University of Phoenix, received “88 percent of its revenue from federal programs last year, most of it from student loans,” the USA Today reported.