By: Kourosh Behnam
March 26, 2012
On March 5, 2012 a new report by the Federal Reserve Bank of New York, Grading Student Loans, stated that the outstanding balance of student debt stands at $870 billion surpassing credit card debt ($693 billion) and auto loan debt ($730 billion).
According to the Consumer Financial Protection Bureau (CFPB) student debt has surpassed $1 trillion late last year. This estimate is 16% higher than the earlier findings by the Federal Reserve Bank of New York. This figure was released wednesday at a news conference in Austin, Texas. CFPB officials are planning to release their study this summer.
As reported by the Project on Student Debt, two-thirds of college seniors who graduated in 2010 had an average student loan debt of $25,250. The state with the highest average student debt in the nation was New Hampshire with $31,048 and the state with the lowest average student debt was Utah with $15,509. The accumulation of student debt is much higher in the Northeast and Midwest due to students attending private nonprofit four-year colleges. However, most students who attended college in the western states accumulated less debt due to their attendance at public four-year colleges.
The price of higher education has been growing at twice the rate of the economy, it has outpaced health insurance and consumer prices in general. This is due to a long-term tuition bubble. Price of education has increased while the demand has also increased. Students are paying more for a deteriorating product, yet it is assumed that this is a financial investment with returns to come following graduation.
Student debt has become the latest financial crisis in America. If we sit back and do nothing about this, the entire economy will crash again. We can all disagree on how to fix this growing problem, but if we disagree on its existence then we are spiraling down a unsustainable path that will propel us into another recession.
Although some students have found jobs after graduation, most have not. With student debt at $1 Trillion congress needs to act fast on how to alleviate or cancel student debt. If the government bailed out the big banks with our tax payer dollars then I believe the billionaires should be taxed to cancel student debt!
To help decrease the burden of student debt on our future generation of Americans please read H.R. 4170 The Student Loan Forgiveness Act of 2012. You can also sign the petition here. This piece of legislation is a crucial step in the fight for student loan debt cancellation.