Student Loans Passed Credit Cards as America's Largest Source of Debt

#Money

Thu, Sep 15th, 2011 11:00 by capnasty NEWS

According to this article on The Daily, America's largest source of debt isn't credit cards anymore, but student loans.

"The main driver is likely the unemployment rate," said Mark Kantrowitz, publisher of FastWeb.com and FinAid.org and a student loan expert. "People without jobs can't pay back their student loans."

While things have improved slightly for the class of 2011 in terms of employment, the classes of 2009 and 2010 are still having difficulty joining the work force.

Interest rates on federal loans have also increased in the last five years as Congress switched over from variable rates to fixed rates in 2006. The 6.8 percent interest rates that students have been paying off since then -- in contrast to a 2.88 percent rate in 2005 -- have been another contributing factor to the recent jump, according to Kantrowitz.

Increasing student costs also makes it more difficult to pay back loans. The average cost of attending a four-year college in the United States has risen almost $1,500 dollars a year since the worst of the recession, from $19,592 in 2007 to $20,986 in 2009, according to numbers from the National Center for Education Statistics, adjusted for inflation.

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