Student Debt Now Exceeds All Credit Card Debt

I attended two talks this week regarding the future of the veterinary profession. During each of these unrelated talks, there was a news flash: STUDENT DEBT IN THE UNITED STATES NOW EXCEEDS ALL CREDIT CARD DEBT IN THE UNITED STATES.

Don’t be fooled, it’s not that we’re simply getting a really good handle on credit card debt in this country — we’re not, credit card debt is still a major problem in the U.S. But now we are faced with the fact that our educated population has accumulated over a TRILLION dollars in student debt at the beginning of the 2011-2012 school year and shows no hope of slowing down.

When faced with this kind of debt in combination with a limited number of job openings, our students face a very daunting financial crisis that is very personal and yet very universal amongst their fellow students in the United States.

Not many students are able to keep up with the rising costs of tuition and many face careers that are not nearly lucrative enough to cover their student debt upon graduation.

In my meeting last night, it was brought to my attention that some students attending veterinary schools in the Caribbean who were not eligible for government loans (because of their school’s lack of accreditation) were forced to take on private loans that had interest rates of 12-15%! Now they are graduating and facing a situation where their expected loan repayment is 70% of their salary! No one can live off of that.

Is it possible that we are going to see more and more students defaulting on their loans because they are simply unable to manage the burden of their student debt? Yes. I think it’s entirely possible. But having students default on their loans is not going to do any good for our already fragile economy.

How to fix this situation is not necessarily something I can propose ideas for. However, I do believe that in order to make sure that we don’t see an overabundance of defaults, we need to bring the cost of education down to a point that it is manageable for students and it is at a level where it is reasonable to expect students to pay back the money in time, at a reasonable interest rate.

Of course, there is always the issue of Income-Based Repayment (a.k.a. IBR) which I’ve mentioned in passing on this site, but I think it deserves more attention in the future. I’ll be sure to get back to you all with more information regarding how to manage student debt as many of you are or soon will be in the situation of having to pay back a seemingly insurmountable amount of money on a very limited income.