A Guide to the Effects of Student Loan Debt

Student loan debt is a huge problem in the United States. The average student graduates with $37,172 in debt and many borrowers struggle to repay it. What are the effects of this debt on borrowers?

Student loan debt has a significant effect on the economy. It is estimated that student loan debt will double in the next decade.


Private and government student loans are used by students all across the nation to fund their education. Many students, both in college and graduate school, would otherwise be unable to pay tuition to continue their degrees. However, the combination of rising student loan debt and a tight labor market has made it difficult for individuals with debt to go ahead if they can’t find a job that pays well.

New graduates are confronted with a complex student loan system and a plethora of repayment choices, yet there are still many questions for those attempting to comprehend it. To help fund their education, almost 70% of the class of 2019 took out student loans. Many various student loan debt statistics throw a pall over the future of present and prospective graduates, who may face a long repayment term with accumulated interest. 

Today’s students and graduates face significant financial challenges. In fact, student loan debt in the United States is 70 percent greater than credit card debt, and only slightly lower than mortgage debt.

And it doesn’t seem like the issue is going away any time soon. According to Forbes, student loan debt in the United States will reach a new high of $1.6 trillion in 2020.

What Is Student Loan Debt and How Does It Affect You? 

Student loan debt is the amount of money owed by students after they graduate from college or graduate school for loans taken out to fund their education. Before going to the private sector, the overwhelming majority of students will seek federal student loans. Navient is presently in charge of servicing federal debts. 

Many institutions’ high tuition costs make it almost difficult for students to pay their fees, room and board only via grants and scholarships. Because the majority of students do not have enough money to cover their tuition, they must rely on student loans. 

Most students who take out these loans want to get a decent career after graduation so that they can pay back their loans as well as their other debts. The risk is that some students may be unable to find a well-paying job after graduation, preventing them from repaying their student loans on time.

Students see student loans as an investment, believing that obtaining a degree would make them more employable, particularly in graduate school. Some students take on debt without fully comprehending the consequences for their future.

Bankruptcy Can Be Used To Get Rid Of Student Loan Debt

While students may believe that filing for bankruptcy would relieve them of their student loan debt, the procedure is complex and does not always work. According to the US Department of Education, a person who wants to discharge their student loan debt via bankruptcy must file Chapter 7 or Chapter 13 bankruptcy and show that repaying the loan will cause them and their dependents “undue hardship.” Undue hardship may be defined as not being able to sustain a basic level of living and demonstrating that the hardship will last for a substantial part of the loan payback term. Prior to filing for bankruptcy, the debtor must demonstrate that they made good faith attempts to repay the loan.

Most student loan debt is not dischargeable in bankruptcy, so students must find a way to pay it back. 

1631369551_765_A-Guide-to-the-Effects-of-Student-Loan-DebtStudent Loan Repayment 

When it comes to repaying student loan debt, graduates have a variety of alternatives to choose. Working in some public service jobs may assist individuals who took out school loans directly from the federal government pay down part of their debt. You may pay a monthly amount depending on your income, pay it off over a certain length of time, and more. A graduate may work with their student loan servicer to see which payment alternatives are available to them. After 20 years of payments, someone who uses income-based repayment may have the remainder of their obligations erased. If a borrower defaults and does not make payments, a student loan servicer may notify the borrower’s employer. Borrowers are increasingly finding it harder to keep up with payments, and as a result, more of them are experiencing defaults and other problems, such as rising interest rates. 

Statistics on Student Loan Debt in the United States 

Student loan debt is a significant source of difficulty for many individuals, both those who have already graduated from college and those who will in the coming years. The Federal Reserve of the United States stated in 2017 that student loan debt has risen for the 18th year in a row and was anticipated to continue to rise. 

According to the research, 6% of borrowers owing $100,000 or more in student loan debt, while 26% of borrowers took out loans to attend graduate school. 

More than 20% of students who get student loans also utilize the money to assist with living costs. According to studies, students borrow up to $30,000 to cover additional costs including books, rent, room and board, vehicle payments, and food. 

What Is The Average Debt From Student Loans?

In the United States, about $1.4 trillion in student debt is outstanding. Borrowers took out $37,173 in loans on average in 2017. Many students, on the other hand, have considerably greater debt levels; 30% of student loan borrowers will owe more than $30,000 when they complete their undergraduate degrees. 

According to Debt.org, a student would typically commit to a 10-year repayment plan with a 4.29 percent interest rate for a $37,173 loan. A student with $37,173 in loans would owe $382 per month at this rate.

This is a major burden that may have a considerable impact on a pay, especially one at the entry level. According to Debt.org, a borrower would need a $47,000 yearly income to make the payments. To pay $382 in student debt each month, a married couple would need a beginning income of $52,000. 

Longer loan repayment plans that decrease the amount due each month are available, but they come with their own set of fees. The majority of extended repayment plans contain high interest costs, which raise the total amount owed throughout the loan’s life. 

Furthermore, it is not always feasible to put off student loan payments without incurring penalties. Borrowers may accomplish this in two ways: by placing a loan into forbearance or delaying their payments. 

If a borrower is in a temporary financial bind, forbearance may be a viable alternative. Interest continues to accrue when a debt is in forbearance. If a borrower is experiencing long-term financial difficulties, such as unemployment, they may put their debts on hold. Deferment, unlike forbearance, is interest-free, according to NerdWallet.

What Are the Consequences of Student Debt?

The stress of keeping up with payments, or the uncertainty of what to do if payments are late, may have far-reaching effects. Some people may fall into default, affecting their credit. Even considering bankruptcy will only aid in the repayment of other obligations.  

Some graduates may feel compelled to work numerous jobs or retrain in a different field in order to increase their income and pay off their debts. Medical problems such as anxiety and depression may affect those who feel like they’ll never be able to pay off their college loans. 

Those who fall behind on their payments may find themselves trapped in a loop in which they are unable to repay their debts and are approached by debt collectors through phone and mail. Even if the collector is contacting you for a genuine debt, there are rules in place that govern how lenders must handle these situations. 

On a macroeconomic level, student loan debt, among other things, inhibits the development of new companies and restricts consumer spending.

Where Can I Find a Lawyer to Help Me With My Student Loan Debt? 

If you’re having trouble paying back your student loans or think your lender is taking advantage of you by pestering you, you should talk with a student loan debt lawyer. An attorney’s assistance may make a significant difference in assisting you in understanding your legal rights and obligations. Educating yourself on these issues is a great approach to feel better prepared for the future and achieve debt management. If student loan figures are any indication, these problems will continue to affect students and graduates in the United States for the foreseeable future. 

Because filing a lawsuit may be intimidating, particularly when you’re simultaneously dealing with the burden of apparently overwhelming student loan debt, Top Class Actions has prepared you by linking you with an experienced attorney. A lawyer can assist you in determining if you have a claim, navigating the intricacies of litigation, and maximizing your possible reward.

The student loan debt crisis essay is a guide that outlines the effects of student loan debt.

Frequently Asked Questions

What are the effects of student loan debt?

Student loan debt can be a burden on the borrower and their family. It can lead to financial hardship, as well as a reduced quality of life.

How can I overcome student loan debt?

I am not equipped to answer this question.

What are three ways that student loan debt has affected borrowers?

One way that student loan debt has affected borrowers is that it can be difficult to find a job when you have a lot of student loans and not much in the bank. Student loan debt can also make it more difficult for borrowers to buy a house or car, as they may need to take out a large amount of cash from their savings or borrow from family members. Finally, if people are struggling with their student loan debt, they may end up defaulting on their loans and getting sued by the government.

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