FICO Survey Says that Student Loan Debt Will Further Debilitate Economy
In recent months there has been growing concern for the huge debt student loan borrowers have taken on in the past decade (over $950 billion). In this day and age it only seems normal that a student would borrow to pay for college but the question of whether it’s safe for our economy is hard to answer.
Source: Flickr/lewish1990
If it brought a net increase in our economy it would be justified but usually huge debt amounts to nothing good. Much of this debt is because students are sometimes not aware of the colossal difference between private student loans and federal direct loans.
That’s why FICO’s quarterly survey is so important in addressing what I call the student debt crisis. That’s exactly what it is because many of these students truly don’t understand the obligations of getting loans.
It gets even more complicated for a student to try and figure out whether student loan consolidation is the right option or not. Many of the servicers and companies out there truly don’t take the time to help the students navigate through a complicated system that truly is a pain, that is, for the students.
About 67 percent of the FICO respondents said that they expect delinquencies to rise. What’s even more important is that the head of FICO labs said “A significant rise in defaults on student loans would impact lenders as well as taxpayers, who could be facing big losses due to these defaults. Our survey results underscore the ongoing challenges that millions of American households face as they try to cope with their debt during these uncertain times.”
This could mean lots of trouble for private lenders and the federal government who are expecting this money back with interest. It’s not only disturbing but a good indication that the system in place right now is not working and as we all know, the economy isn’t bringing much alleviation to this trend.
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