When Is $1 Trillion Bad? When it’s Student Loan Debt
The total amount of outstanding student loan debt has already hit the $1 trillion mark, according to the Consumer Financial Protection Bureau.
What has been lurking in the shadows has finally come, the outstanding student loan debts has been confirmed of hitting the $1 trillion mark according to Rohit Chopra, the ombudsman of the Consumer Financial Protection Bureau.
In a post on the bureau’s website, Ombudsman Rohit Chopra notes that total debt reached this mark sooner than other reports anticipated—the Federal Reserve Bank of New York, for instance, stated earlier this month that the total debt was only $870 billion.
Student loan debt now stands second only to our total national debt, having surpassing total credit card debt in 2010 and topping the amount of auto loan debt held by Americans earlier this year.
Efforts to address this growing problem—which some have placed at a growing rate of as much as $3,000 per second—have resulted in many suggestions, but none overarching. The CFPB and the Department of Education have also taken steps to help students better understand the implications of loans.
In October, President Obama announced a 10 percent cap on federal student loan repayments, down from the previous 15 percent. This policy would not lower the debt, but give students with new loans a greater buffer to prevent defaulting.
One solution that some say might put a greater dent in this 13-figure issue is an idea from the Student Loan Borrower Assistance Project. As a part of the National Consumer Law Center, representatives from the group testified before the Senate Judiciary Subcommittee on Administrative Oversight and the Courts, arguing that the current bankruptcy law is unfair to students by treating them the same way as people who are trying to discharge child support alimony.
While it might help students, a higher bankruptcy rate could make it harder for students to obtain private student loans as lenders would become more wary.
Jeff Raines is a journalism intern with Campus Progress. You can follow him on Twitter @Jeff_Raines.