The high cost of college or student loan debt

Every day, there are news stories about the college tuition crisis. But what is the crisis we are seeking to solve? Is it the staggering amount of student debt? The rapidly rising cost of higher education? The interest being collected on student loans? The high default rate on student loans? Or all of the above?

The central problem for many is the accumulated student loan debt. At nearly $1.6 trillion, student loan debt exceeds accumulated car loans and even credit card debt. By almost any definition, this is a crisis: It is certainly a crisis for those with student loan debts whose repayment schedules span decades, with large monthly payments. It is also a crisis for lenders experiencing significant default rates and, perhaps, a crisis for the federal government, as it guarantees these student loans. Many argue that it is also a crisis for our nation’s economy; servicing this debt has a chilling effect on the sale of houses, cars, appliances, and furniture, as well as spending for vacations and luxury items.

But student debt is only one part of a much larger crisis. This debt, regrettably, is on a trajectory to grow much larger in the future. Economists project an accumulated student loan debt of $2 trillion by 2021, and, at a growth rate of 7% a year, as much as $3 trillion or more by the end of the next decade.