Tuesday, December 11, 2012

US student loans: The trillion dollar debt trap

As the cost of a university education soars, default rates are on the rise. Some estimates say that more than five million borrowers in the US have defaulted on their student loans. Almost 375,000 people defaulted in the latest year alone, the US Department of Education says.

And those borrowers can face dire consequences.

Jill McDevitt, 27, is well-educated and renowned in her field - but she’s overwhelmed by $150,000 (£93,500; 116,300 euros) of student debt.
She lives with her partner in the suburbs of Philadelphia, in an 800 sq ft flat that lacks laundry facilities. “I have a PhD, and I do my laundry in the ‘coin op’ place,” she says.

“I just cannot pay that amount,” she says, and having tried to negotiate with several lenders without success, she is losing her will to fight.
“My credit is already in the dumps,” she says. “What is the incentive if I’m already screwed?”

Ms McDevitt is not alone. Student debt is a one trillion dollar headache for the US economy - and it is only getting worse.

Read the full story at BBC World News

RD 06:52:41