The staggering amount of student loan debt America is accruing is becoming a bigger concern for a number of experts, as debt – which increased 20 percent between 2011 and 2013 – is seemingly becoming more overarching in nature.
At the start of the month, interest rates on undergraduate Stafford loans had risen from 3.86 percent in 2013 to 4.66 percent this year, regardless of whether the loan is subsidized or unsubsidized. Graduate Stafford loans, on the other hand, increased from 5.41 percent to 6.21 percent for subsidized products, while PLUS loans, which can be taken advantage of by graduate students and parents of college students, are set to rise from 6.41 percent to 7.21 percent. These increases do not apply to existing loans.
Be that as it may, several individuals have chimed in their concern. The Institute on College Access and Success president Lauren Asher, for instance, was quoted as saying that she is worried about the possibility students may take out privatized loans, which come with more risk and do not come with income-based repayment features, among others.
Also, Rory O’Sullivan, deputy director of national non-profit think tank Young Invincibles, said that his generation (the so-called “millennial” demographic) would not welcome any potential increase to student debt costs. “We expect the rates to continue to go up over time, so the problem is only going to get worse,” he added.
Statistics show that the average college graduate owes an average of $30,000, and that about 15 percent of all student loan borrowers default on their loans within three years of graduation, an issue that is magnified when the student is a graduate of a for-profit educational institution. Student loan interest rates are currently benchmarked against the 10-year U.S. Treasury Note, and this rate is then added to a fixed percentage that may change depending on the type of student loan product. Rates, which change annually, remain the same throughout the life of loan.