Student Loans Are Ruining Your Life. Now They’re Ruining The Economy, Too

Loans average $750, and a repayment rate of 99 percent, which shows that students will pay back their loans if given the opportunity. As students continue to successfully repay their loans, they are creating that repayment history and opening the door for millions of other students in the future. Beginning on April 2, all student loans sourced by will be posted on Kivas website for crowdfunding rather than on the Vittana website. Visitors will be able to browse through the stories and profiles of students and select one they want to support with a loan of $25 or more. Kiva connects millions of people around the world through lending to alleviate poverty in areas lacking access to traditional banking systems. With as little as a $25 loan, anyone can help a borrower to start or grow a business, go to school, access clean energy and realize his or her potential.

In two recent decisions, though, courts granted relief to borrowers who hadn’t made voluntary payments on their debt and who refused to enroll in income-based repayment plans. The appeals court judges in both cases said enrolling would have been pointless given the women’s tiny incomes. In a third case, the borrower was both employed and healthy, but wage garnishments by his student lenders left him unable to support his wife and two children. Michael Hedlund was twice granted relief in bankruptcy court, but his lenders challenged the decisions both times, said Derek Foran, a partner with San Francisco-based Morrison & Foerster, who along with attorney Yonatan Braude represented Hedlund for free in those appeals. The court battles ultimately resulted in a decision by the U.S. 9th Circuit Court of Appeals that upheld Hedlund’s bankruptcy relief.

Provide the means of obtaining a college education, without the burden of graduating with a mountain of debt. We go to college to increase our opportunity in our adult life. While receiving a degree does just that, the burden that debt places on us can be detrimental to our progress in our adult lives. These astronomical student loans can even impact the economy as a whole, TIME reports. We will be less likely to spend money on goods and services that help this country thrive economically, because of our student loans.

Portions of Student Loans are Increasingly Going Toward Non-College Expenses

The catch is that “if you had $5,000, you would not be eligible for a student loan discharge,” Sommer added. Several recent court decisions have challenged the notion that only the worst-off borrowers, typically those who are permanently disabled, can get education debt erased. The borrowers who won these discharges had low costs, either receiving free legal help or representing themselves. In most cases, borrowers in bankruptcy don’t even ask for help because they figure a discharge of debt is so rare. In one study of 170,000 student loan debtors who filed for bankruptcy protection in 2007, only 51 won full discharges of their debt and 30 received partial discharges. The author of the study, which was published in the American Bankruptcy Law Journal, found that only 213 of the student loan debtors studied even tried to have their education debt discharged by filing what’s known as an “adversary proceeding.” Since bankruptcy law doesn’t allow student loans to be erased in a regular filing, this extra step is necessary before education debt can be discharged.

My debt is hanging over my mind. Im taking that all on myself. Rong isnt alone. Across the U.S., students are taking on increasingly large amounts of debt to pay for heftier education tuitions. Figures released last week by the Federal Reserve of New York show that aggregate student loans nationwide have continued to rise. At the end of 2003, American students and graduates owed just $253 billion in aggregate debt; by the end of 2013, American students debt had ballooned to a total of $1.08 trillion, an increase of over 300%.

It followed a warning by the U.S. Education Departments inspector general last month about the rising popularity of online education, which has led more students to borrow excessively for personal expenses. Its report said that among online programs at eight universities and colleges, non-education expenses such as rent, transportation and miscellaneous items made up more than half the costs covered by student aid, the WSJ reports. In 2011-2012, about a quarter of student borrowers got loans totaling more than their tuition, after grants, by about $2,500, according to research by Mark Kantrowitz, a higher-education analyst and publisher of the education site Some students say they are planning to get a degree but must borrow as much as possible because they cant find jobs that pay enough to cover day-to-day expenses.


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