Content provided by Sadie Brewer, CLS Marketing Communications Specialist
Lately I’ve seen and heard a lot of talk about the increasing cost of college, high student loan interest rates, and the looming question: is the reward worth the cost? For example, some analysts are calling the $1 trillion in student loan debt the next bubble, and the July 1st deadline that will double the rates on subsidized loans. As a borrower myself, this doesn’t just scare me – it makes me mad.
Since 2008 people have been struggling to regain trust, feel optimistic, and rebuild their lives. In my opinion, one group that holds the most potential to really jump start the economy is Generation Y. This group is on track to be the most educated in American history, which equals large amounts of student loan debt. Currently, government loans are averaging a 6 percent interest rate (for loans taken after July 2006), and the average amount of student loan debt is currently at $26,000. That’s a whole lot of interest paid, especially for someone trying to start their life and career, in an already poor job market. A break in interest rates could be life changing for a lot of people – not to mention the impact it could have on the economy. Dropping rates 2 or 3 percent would mean that same amount will be pumped into the economy. This generation wants to buy houses, new cars, eat out…they want to spend money!
I’m not saying borrowers shouldn’t have to pay their debt, or even that they shouldn’t have to pay interest, personally though, I’d like to spend that couple of hundred dollars in interest I pay each month and put it back into the economy.