This topic immediately strikes a chord and a lot of debate amongst the people in our country. The growing student loan debt in the U.S. has become a major concern. It’s at about $1.3 trillion today (that’s about double what it was in 2009 when Obama took office).
Let’s take a closer look at the points being presented on both accounts and how they relate to the state of our economy and an individual’s personal finances.
Reasons Student Loan Debt is Helping the Economy
For those individuals that believe the country’s student loan debt is helping our economy, they agree with the following key points:
The student loan debt helps the country’s economic output.
Student loan debt is an investment.
They believe this investment will be paid off with higher incomes as a result of higher education.
In the long run, a more educated workforce is helping the economy by contributing to an increase in productivity and total output.
The educated workforce has learned the skills that employers are looking for in their employees.
Reasons Student Loan Debt is Hurting the Economy
For the individuals who believe that student loan debt is hurting our economy, they agree with the following key points:
Student loan debt can affect an individual’s access to credit.
Student loan debt has decreased the number of individuals who own a home.
The student loan debt is limiting the amount of innovation and entrepreneurship in the U.S.
The number of young people starting their own business has decreased.
The debt is also decreasing the ability of individuals who have borrowed money to save for retirement.
Overall, there are several factors to consider. It’s up to the individual to decide if taking out student loans is worth it in the end. Whether or not the student loan debt is helping or hurting our economy is still up for debate.
Advice from The Debt Doctors
If you are facing debt as a result of student loans, here are some tips and best practices from The Debt Doctors:
Be sure to utilize all of the programs available including income based repayment, forbearance and deferment.
If you are a parent think twice about co-signing on student loans. A lot of times parents will co-sign for their children and they can’t afford it. It’s important to remember it’s your child’s education and you should explore all options available so they can finance this education themselves.
Parents should also avoid taking money out of retirement to pay for their children’s education. There are a lot of options available to fund education but very few to fund retirement.
Avoid using a home equity loan to fund college. If you lose income or have any other financial distress it could make it difficult to keep your home. You don’t need to put your home at risk when there are many other options to fund education.
If you have a student loan garnishment or a student loan company has begun any type of legal proceeding, contact The Debt Doctors. In many cases our attorneys can use a Chapter 13 bankruptcy filing to stop these negative actions and force the student loan company to defer your loans or accept an income based repayment.
In general, student loan interest rates are some of the lowest. Don’t be in a hurry to pay them off. Instead, use your resources to build regular and retirement savings before you write a big check to your student loan servicer.
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