ConsumerWatch: More College Grads Struggling To Pay Student Loans

SANTA ROSA (CBS 5) – A growing number of college graduates are having trouble paying their student loans. Defaults are up dramatically, and some experts think it’s going to get worse as the economy continues to struggle.

Americans are making progress chipping away at some forms of debt, like credit cards and car payments, but outstanding student debt is up 25% since the start of the financial crisis began in 2008.

Ben Mangan, President of the non-profit financial help group, EARN, said many new graduates simply aren’t earning enough to pay their loans.

“Students are graduating into a recession where the unemployment rate is high, it’s very difficult to find jobs, wages are stagnant. You have the perfect storm,” Mangan said.

A recent study by the John J. Heldrich Center for Workforce Development at Rutgers puts the median salary for a 2010 college graduate at $27,000.

Alene Levinson of Santa Rosa is concerned about her daughter’s law school debt, even though it will be years before she will have to start paying.

Levinson’s daughter Raquel needed a $15,000 loan to finance her first year of law school. Since the school does not qualify for federal education loans, the family was forced to resort to a private education loan from Wells Fargo.

Levinson said she was shocked when the loan was granted – at a interest rate of 15%.

“It’s not affordable. The finance charge exclusively is $35,932.82,” Levinson said. “And that’s just for the first year.”

(Copyright 2011 by CBS San Francisco. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)

  • Milan Moravec

    University of California Berkeley ranked #70 Forbes is the most expensive public university in the USA.

    And UC Berkeley Chancellor Birgeneau wants faculty to receive merit, pay, salary increases while californians suffer from 12% unemployment.

    After the pay raises Cal will be even more expensive than it is now and cause addition hardship to Californians.

    Honorable retire UC Berkeley Chancellor Birgeneau as he does not represent Californians during the greatest recession in modern times.

  • *POCSmom’s Insight: College Loans | POCSmom's Insights
  • Sickofwhiners

    Here is the rub, you CHOSE to take the loan. The interest rate on alternative educations loans is a margin based on CREDIT! If your daughter had better credit or a better cosigner, she would have received a better rate. So this family whines and gets a rate that someone who took the time to take care of their credit would get……

  • Alene Elka Levinson

    It is not that they “chose to take this loan” this is the ONLY bank that this Law school works with EXCLUSIVELY!!….Had they been given the option to take a loan with a credit union offering a reasonable, customary, fair and affordable rate, this family would have taken this offer versus the bank loan rate at 15%

  • Loans xenon

    Obtaining very bad credit financial products along with effortless mortgage approvals can be challenging. Classic loan companies is not going to use really poor credit financial loans and also penalize an individual on your credit score …Jak Kupic mieszkanie w Anglii

  • CKID

    It’s not just recent Grads, it borrowers in their 30’s and 40’s and beyond that are struggling as well. Not to mention the parents that co-signed for some of the loans.

blog comments powered by Disqus
Shine A Light On The Holiday Season With ‘Giving Tuesday’
Food For Families Drive

Listen Live