Student loan debt in the United States is among the largest types of debt in the country. Some have called it the next great economic bubble, like the subprime mortgage crisis of 2008.
In all, Americans owe $1.78 trillion. A little over 7% of that comes from private loans, while the rest comprises a variety of federally funded lending. And it’s a bubble that’s getting bigger.
It has trebled in 15 years, growing from $545 billion in 2007 to today’s gargantuan figure.
The Biden Administration attempted to lighten the load by forgiving $10,000 of federal student loan for each borrower, only for the Supreme Court to strike down the $400 billion plan at the end of June. But all is not lost. A new plan released by the White House seeks to cut loan repayments in half for some and to zero for borrowers in poverty while also forgiving some balances after 10 years instead of 20 years. It also will ensure that some borrowers who make regular monthly payments do not see their balance pushed up by high interest.
For individuals, the debts amount to $38,000 for federal and $55,000 for private on average, which usually comes with a high level of interest and terms that force the borrower to start paying it back between six and nine months of graduating for federal and sometimes immediately in the case of private loans.
Despite not being the wealthiest country in the world, only one other nation saddles its students and future workers with that level of debt. English people in the United Kingdom have higher debt than Americans leaving college, racking up $58,000 on average. However, those loans are made exclusively through the government, have far lower interest rates, and are paid off through the borrowers’ salary at 9% per month after the individual passes an earnings threshold.
For example, the average salary in the UK, which is where England is, is about $42,500. Depending on the borrowers’ repayment plan, all of which are similar, a recent graduate would pay back $105…
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