Generation Debt

BusinessWeek covers debt issues, especially student loan debt issues, for those 30 years old and over:

"The cost of higher education, however, has increased so dramatically in the past decade and a half -- up by 63% at public schools and 47% at private -- that more students have to borrow tens of thousands of dollars to attend, ensuring that many of them are paying off those loans well into their 40s. The median debt-to-income ratio now is about 8%. But fully one-quarter of graduates are paying more than 12% of their income, a level many financial experts regard as worryingly high. That burden will only grow: Interest rates on student loans are going up for the first time in five years.

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These trends have intersected before -- paying off college loans has never been easy, and earlier generations have had to contend with weak job markets -- but they are felt more keenly today. Almost two-thirds of students have to borrow money to get through school; as many as one-quarter may be accumulating credit-card debt to help pay for tuition. The median debt for college graduates in 2004 was $15,162, an increase of 66.5% since 1993. That may not seem like a crippling sum, but plenty of individuals owe much more. Back in 1993, only 4.2% of graduates had loans exceeding $25,000. A decade later, 17% did."

My comments to the article (should they be approved):

"Certainly we all should have been better about being more frugal while we were in college and/or grad school, but I wonder how many of the "it's your own fault" types of commenters have made mistakes or decisions based upon immature judgment in their past? Were we all supposed to be perfect adults, able to make informed decisions on any issue at age 18? At 22? The fact is, the student loan industry, aided by the current state of higher education law, sets many borrowers up for a life that indentures them to their debt. High interest rates on government-guaranteed loans (loans that can't be discharged in bankruptcy) insure that lenders make huge profit off the backs of student borrowers. The one-time consolidation rule alone is a boon to lenders and a bane to borrowers.

There are a few small, simple fixes that can be put in place to help ease the burden of debt for those who went to college to make a better life for themselves, only to find that they are now stuck with exorbitant interest payments to student loan companies. H.R. 1029, the Student Loan Fairness Act of 2005, was introduced in the House to permit refinancing of Federal student consolidation loans, and to permit students freedom to select a student loan consolidator. H.R. 1033, the Student Loan Interest Full Deductibility Act, was introduced in the House to amend the Internal Revenue Code of 1986 to repeal the limitations on the maximum amount of the deduction of interest on education loans. These small changes will ease the debt burden of thousands of citizens, yet the bills are stuck in committee, with no action in sight."