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.”
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