College debt holders are about to start accruing interest and paying off their balances again as the Covid protocols are coming to a close and the Supreme Court ruled the Biden plan to pay off the debt can't happen. This has many of those debt holders asking themselves “I owe how much?” We wanted to take a look at this topic from the view of how credit unions can help their members, but first, we want to take a subjective view of how we got here.
As of March 2023, U.S. student loan borrowers are on the hook for $1.78 trillion in federal and private student loan debt, according to the Federal Reserve. The most recent data from the College Board states that 55% of the 2020 graduates came out with a loan due. The average student loan debt for these graduates was $28,400. This is below the average U.S. household debt of $58,238, according to Nerdwallet. About one in five U.S. adults have student loan debt, according to census data. This is an issue for many Americans and that means it affects your members.
The History of College Debt
The history of college debt in the United States is a long and complex one. The first student loans were offered in the early 1800s, but it wasn't until the 1960s that student loan debt began to rise significantly. This was due to a number of factors, including the increasing cost of college, the availability of federal student loans, and the growing popularity of college as a pathway to a better job.
In the 1970s, the federal government began to offer more generous student loan programs, which led to even more borrowing. By the 1980s, student loan debt had become a major problem, with the average borrower owing more than $10,000.
In the 1990s, the cost of college continued to rise, and so did student loan debt. By the early 2000s, the average borrower was owing more than $20,000.
The 2008 financial crisis led to a decline in the availability of student loans, but the cost of college continued to rise. As a result, student loan debt began to rise again. By 2019, the average borrower was owing more than $30,000.
How College Debt Has Risen So Much
There are a number of factors that have contributed to the rise of college debt in the United States. These include:
- The increasing cost of college. The cost of college has been rising faster than inflation for many years. This is due to a number of factors, including the rising cost of labor, the rising cost of materials, and the increasing demand for college education.
- The availability of federal student loans. The federal government has made it easier for students to borrow money to pay for college. This has led to more students borrowing money, and to more students borrowing more money.
- The growing popularity of college. College is now seen as a necessary step for many people who want to get a good job. This has led to more people going to college, and to more people borrowing money to pay for college.
What Credit Unions Can Do to Help Their Members Handle Debt
Credit unions can play a valuable role in helping their members handle college debt. Here are a few things that credit unions can do:
- Offer financial education. Credit unions can offer financial education programs to help their members understand how to manage their money and how to repay their debt.
- Provide debt consolidation loans. Credit unions can provide debt consolidation loans to help their members combine their multiple debts into one loan with a lower interest rate.
- Offer deferment and forbearance options. Credit unions can offer deferment and forbearance options to help their members temporarily postpone their loan payments.
- Provide loan forgiveness programs. Credit unions can offer loan forgiveness programs to help their members repay their debt if they work in certain fields or meet certain requirements.
By taking these steps, credit unions can help their members manage their college debt and build a brighter financial future. When you want to help lend to your members you need the best forms and that is where Oak Tree comes in. A happy credit union community contributes to a happier and healthier way of life.