Student loan debt hell

Jill McDevitt, 27, is well-educated and renowned in her field - but she's overwhelmed by $150,000 (£93,500; 116,300 euros) of student debt.

She lives with her partner in the suburbs of Philadelphia, in an 800 sq ft flat that lacks laundry facilities. "I have a PhD, and I do my laundry in the 'coin op' place," she says.

Ms McDevitt has a career that she loves - lecturing, writing and speaking on human sexuality - but as she did not receive any financial aid, she took out private loans to pay for her degrees, leaving her with monthly payments of $1,600.

"I just cannot pay that amount," she says, and having tried to negotiate with several lenders without success, she is losing her will to fight.

"My credit is already in the dumps," she says. "What is the incentive if I'm already screwed?"

Ms McDevitt is not alone. Student debt is a one trillion dollar headache for the US economy - and it is only getting worse.

As the cost of a university education soars, default rates are on the rise. Some estimates say that more than five million borrowers in the US have defaulted on their student loans. Almost 375,000 people defaulted in the latest year alone, the US Department of Education says.

And those borrowers can face dire consequences.

The federal government has strong tools to help recover debt from delinquent borrowers, including garnishing 15% of their take-home pay, and retirement income, according to education finance expert Mark Kantrowitz, publisher of the FinAid and Fastweb sites.
"It's like a trip through hell with no light at the end of the tunnel," he says. 
Borrowers in default cannot get a mortgage or a car loan. And their credit will be ruined, which can affect their ability to rent a flat or even get a job. 
"We are at a tipping point," says Anne Johnson, director of Campus Progress, an advocacy group. 
The long-term impact of heavy debt on young people is overwhelming, says Ms Johnson. 
"It's changing their entire economic outlook for their future," she says. "It's a huge challenge."
She says that the rising cost of higher education is a large part of the problem. 
In the past 30 years, tuition costs have risen by about 1,000%. A four-year degree from a private university can cost close to $150,000.
There is much more.

The story gives other examples of the crushing debt graduates face.  One young woman with $67,000 in debt lives with her parents and commutes an hour each way to a job.  She hopes to have the loan paid down to a point where she can cove out in five years.  All the stories give you an idea of how the loans are forestalling household formation which is further slowing the economy.  The former students have no credit and will takes years to reestablish it.

Clearly a university degree is no longer affordable and is not worth what it cost for many people.  The one exception is petroleum engineering where there is currently a shortage because of demand from teh fracking revolution.


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