Factors Leading to Huge Debts
Several factors have coalesced to create a “perfect storm" when it comes to amassing student loan debt for older Americans. First, many of these recently enrolled higher education students represent a population that is returning to the classroom years after already earning a post-secondary degree. As such, under the Federal Student Aid Commission’s guidelines, they are ineligible to apply for government grants, so a career pivot that requires a different degree field needs to be completed on the student’s dime. That being said, the federally-secured, student loan program is the only available option for funding that degree acquisition.
Second, whereas the average student loan amount was $3,600 a semester a generation ago, now the loan checks being cashed average $5,500 per academic term. As such, this borrowing propensity has yielded an average total student loan debt of upwards of $25,000 per student. Since the employment situation is still on shaky grounds, the requirement to start repaying this obligation within six-months of graduation is leading to default rates at an alarming pace.
Finally, the growth in for-profit, private universities have provided a host of educational alternatives for the non-traditional student, but the for-profit nature of the institutions translates into a higher price tag for the student looking to finance their education.