This student loan problem is real!
Proposed fiscal budgets for any government office can be overwhelming. Filled with incomprehensible charts, Washington double-speak, and mountains of legalese, tackling one of these can feel like albatrosses for any individual. But within these documents lie important information. President Obama’s 2016 Fiscal Budget is no exception.
While going through the budget many had noticed that last year the student loan program had listed a $21.8 billion shortfall. In other words, those who had owed the government for their student loans, when added all together, came to $21.8 billion! That’s the largest total ever recorded for any government program!
Granted the main cause of the shortfall is due to the Obama administration’s recent reforms in providing relief for many who have student loans. The Obama administration passed measures that reduced existing payments to 10% of an individual’s annual income and forgiving loans after 20 years in hopes of quelling the rising tide of debt. But still, to have an idea of how big $21.8 billion is in federal government terms, if you were to combine the annual budgets of two federal agencies (like the Department of Homeland Security and NASA), last year’s student debt shortfall would still be higher!
It is now estimated that more than 40 million Americans are burdened by at least $1.2 trillion in debt based on student loans. For the most part, student loans are still considered a safe investment considering higher education gives an individual better job placement, which in turn places them in a higher income bracket making it easier to pay off their student loans. The problem however continues to be that higher education costs are outpacing inflation in the US. Even though direct loans from the government have decreased by 44%, the burden of student loans on the government is still increasing exponentially.
So yeah, this is becoming a problem.
(Photo Credit: Google Images, Federal Reserve Bank of New York)