Fast Facts: Student Loans

The Financial Services Roundtable recently released another iteration of its Fast Facts, reliable, bullet-point research about issues facing the financial services industry. Topics span TARP, Dodd-Frank, insurance, lending, retirement savings and more.  Below are some updated Fast Facts on student loans, which are  the largest form of consumer debt outside of home mortgages.

FACT:  More Americans are attending college at a time when college is getting more expensive.

  • Total college enrollment has increased 50% in the last 15 years.
  • College costs are increasing at double the rate of inflation.  Last year, tuition and fees grew 8.3% for in-state students at 4-year public schools, whereas the Consumer Price Index increased 3.6% between July 2010-July 2011.

FACT:  Many students borrow money to pay for a college degree.

FACT:  Student loans are now the largest form of consumer debt outside of home mortgages, eclipsing both auto loans and credit cards, according to the Federal Reserve Bank of New York.

FACT:  The vast majority of student loans are federal loans.

FACT: Private student loans often supplement federal borrowing to help families pay for the higher cost college of their choice.

FACT:  Private student loans have a significantly lower default rate than federal student loans.

FACT:  The federal government can recover defaulted student loans through administrative wage garnishment, offsetting federal tax refunds, and even part of Social Security checks.

  • In contrast, private lenders may not use these methods to collect on education loans.  Further, collections on private education loans are subject to statute of limitations; there is no statute of limitation on the collection of defaulted federal loans.

FACT:  Seventy-two percent of college students who graduated between 2006 and 2011 report that they have paid off one-quarter or more of their college loans, according to the Center for Workforce Development.

FACT:  On average, Americans with a college degree are twice as likely to be employed as the national average.

  • According to the U.S. Department of Labor, unemployment for those with a bachelor’s degree and higher is 3.9%, compared the national average of 7.8%.
  • An American with a bachelor’s degree can expect to earn more than $1 million more over their lifetime than someone who never went to college.

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