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Photo by David E. Kennedy

Photo by David E. Kennedy

Student loan debt is expected to exceed $1 trillion this year for the first time in history. According to the Federal Reserve Bank of New York, this means that Americans now owe more money on student loans than they do on credit card debt.

Student loan debt is different from other types of debt because the debt cannot be shed by declaring bankruptcy.

With the unstable economy, high unemployment rates, and increasing higher education costs, students are borrowing twice the amount of money for college than they were ten years ago after adjusting for inflation, according to The College Board.

Unfortunately, the burden of these outstanding loans falls on the young individuals struggling to kick-off their careers.

Mark Kantrowitz, the publisher of, told USA Today, “Students who borrow too much end up delaying life-cycle events such as buying a car, buying a home, getting married (and) having children.”

Ultimately, the delay in acquiring these major assets could damage the economy.

“The less money that goes into the economy, the worse off it will be,” said Jen Murphy, a finance major at Emory University. “The economy constantly needs to be boosted and fed. If the next generation does not have the funds to buy cars, etc., these industries will begin to fail.”

Beyond the economy, the extraordinarily high level of outstanding student loans sparks the debate over the true value of a college education. It is important to note that for-profit schools — online colleges that offer career-specific courses — have the highest student loan default rates, even though only 10 percent of higher education students are enrolled in them.

Studies show that 25 percent of for-profit college students default on their loans within three years of leaving the school, and most of these students do not even complete their degrees.

Statistics like these have students and professionals alike asking themselves: Does it make sense to go to college and sign up for all of this future debt?

Brown University junior Brian Sokolow said students are dealing with two conflicting notions.

“There seems to be two counteracting pressures,” Sokolow said. “The increased student debt might lead high school students to consider foregoing college altogether, but at the same time, I think a higher rate of unemployment is having the opposite effect. It seems that the job market is getting more and more competitive and as a result a college education seems to be more important for getting a job.”

Murphy believes the student loan debt will have a significant impact whether or not an individual chooses to go to college.

“I would guess that many students will begin to select public institutions over private institutions in order to reduce the cost of tuition,” Murphy said. “Private institutions may begin to suffer.”

And a new federal law that will take effect on October 29 aims to help students and their families determine an accurate tuition estimate. The law requires college websites to have a net price calculator, which can be adjusted to reflect individual circumstances (such as living on campus or off campus).

Innovations such as the net price calculator can help prevent an even greater increase in outstanding student loans and improve quality of life for students.

 To view the original post, please visit USA TODAY College
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