Student Loan Debt Exceeds Credit Card Debt In USA

Almost all Americans have at least some credit card debt, however according to USAToday.com the total student loan debt exceeds credit card debt in the country. As of June, the consumers in the country carry a total balance of $828 billion of credit card debt, while students owe an astounding $850 billion in loan debt.

Oddly, some students don't even know how much they owe — or to whom.

"I'm scared to know," said Carla George, 20, of Detroit, a junior majoring in biology at Wayne State University. She knows that her mother, at one point borrowed about $10,000 through a federal Parent Loan for Undergraduate Students. The PLUS loan lets parents borrow for costs not covered by a financial aid package.

George estimates that she has taken out at least $10,000 in other loans.

"I think it's a whole bunch more," she said.

A college diploma and a good job are supposed to be the payoff for years of hard work in school. But for thousands of today's students, there's going to be a payback, too — as those loans come due after graduation.

Some college students are failing financially long before they get a diploma — or a ‘grown-up’ paycheck.

"Students are far worse off today with student loan debt," said Alan Collinge, who runs a website called StudentLoanJustice.org, where students discuss their troubles with college loans.

With tuition far outpacing inflation for the past 20 years, student borrowing has continued to grow — a whopping 25% last year. Some students who are borrowing never expected to, but their parents have lost jobs or suffered other financial setbacks in the recession.

Continue reading at USA Today.com…

Student-Loan Reform

From Time.com:

Government takeover!" So yelled the many critics of President Barack Obama's health care reform bill. But in their focus on the main event, Republicans seem to have all but ignored another part of the legislation that more precisely fits their rhetoric. In addition to securing the President a victory on health care, the House bill took him one step closer to delivering on a promise to reform the college-student-loan system. If a final piece of legislation before the Senate is approved, millions of students will get their federal loans directly from the Department of Education. In other words, the federal government would sweep aside private competitors in the biggest change to the federal student-loan program since its creation in 1965. It's a legitimate government takeover.

So where's all that outrage now? The thing is, the government already runs much of the student-loan industry. For decades under the Federal Family Education Loan (FFEL) program, the government has handed out subsidies to large banks and companies like Sallie Mae that lend money to student borrowers and collect it from them. In addition, the federal government has been obligated to cover up to 97% of any defaulted loan, effectively eliminating risk for lenders. Figuring that money could be saved by cutting out the middleman, Congress created the Direct Loan program--in which money goes from the Education Department to students--in 1993. The programs have been in competition with each other since then.

Until now. Gone will be the subsidies, and gone will be the FFEL program. As of July 1, all new student loans will go through the Direct Loan program. The savings--an estimated $61 billion over 10 years--will be used to shore up and increase the need-based Pell Grant program by $36 billion and invest in community colleges. While the Administration has reason enough to crow about the proposed measures, it has had to scale back some of its bigger plans. An earlier version of the bill would have invested an additional $20 billion and offered even more substantial financial-aid increases. As it stands, $13.5 billion will be used to stem Pell Grant shortfalls resulting from the increased number of students forced back to college by the ailing economy. And a plan to raise the maximum Pell amount to almost $7,000 per year by 2020 has been replaced with one that maxes out at about $6,000.

With his first major piece of education legislation out of the way, Obama will likely move on to K-12 matters later this year as he attempts to rework the unpopular No Child Left Behind law. But before then, members of Congress (and America's students) are going on spring break.