About one in seven borrowers defaulted on their federal student loans, showing how former students are buckling under higher-education costs in a weak economy.
The default rate, for the first three years that students are required to make payments, was 14.7 percent, up from 13.4 percent the year before, the U.S. Education Department said today. Based on a related measure, defaults are at the highest level since 1995.
The fresh data follows the announcement by Barack Obama’s administration that it would seek to restrain skyrocketing college expenses by tying federal financial aid to a new government rating of costs and educational outcomes. The rising number of defaults shows the pain of borrowers, said Rory O’Sullivan, policy and research director at Young Invincibles, a Washington nonprofit group.
“Our generation is behind in the economic recovery and not recovering as fast as we need to,” said O’Sullivan, whose group represents the interests of people ages 18 to 34. “It’s financial disaster for borrowers. Defaults can dramatically affect their credit rating and make it harder to borrow in the future.”
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U.S. borrowers owe $1.2 trillion in student-loan debt. That is an obscene amount that is literally killing the future of America and postponing everything from household formation to purchasing a car.
Clearly that is not good. If you are a college student with a lot of debt here is my advice for you.
- If you owe less than $50,000 pay it off over time.
- If you owe more than $50,000....DEFAULT NOW. Simple as that.
Now, understand something. American Corporations and the US Government spend billions of dollars each year marketing to you that your Credit Score/Report is basically a sacred institution. Default and it will destroy the rest of your life. In fact, it is so bad that most Americans would rather die than ruin their credit report.
You know what my opinion is? Screw them. These same Corporation default all the time, only to come back and ask you for a bailout. The US Government is basically insolvent. Yet, they want you to be their debt slave forever. Defaulting will not destroy your future. If anything, it will free you up. I highly encourage you to do research into this area to see if defaulting on your debt is a viable option for you.
Now, I know that you technically CANNOT default on your student debt. However, if there is a will there is a way. You are smart, you went to college. Do what you need to do in order to figure out how to do it.
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