The $1.6 trillion in U.S. student debt may not pose a direct threat to the economy, but it’s causing anguish that goes far on the far side financial concerns for the people who owe it.
One in 15 borrowers has considered suicide due to their school loans, according to a survey of 829 people conducted last month by Student Loan Planner, a debt advisory group.
Most student debt is held by people with balances on the lower end of the scale, with only 0.8 percentage of the U.S. population owing more than $100,000, according to Deutsche Bank economists. They have labeled the issue as a “micro problem” for individuals, rather than a macro problem for the economy.
Yet that still equates to 2.8 million people with around $495 billion in debt as of March, according to Department of Education information. Even more worrying is that it’s an increase of about $61 billion since the end of 2017.
Student loans are the second-biggest kind of debt in America behind home mortgages and often more high-ticket to service relative to the amount owed because interest tax are generally higher. Not to mention that unlike buying a home, an education isn’t a tangible plus that can be sold.
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It’s besides turning into a hot political issue as next year’s presidential election approaches. Sen. Elizabeth Warren has projected a plan to cancel loans for galore borrowers, piece former Colorado governor John Hickenlooper addressed some of the knock-on personal personal effects for the economy in a presentation at the Milken Institute conference earlier this week.
“Of course millennials would love to buy a house,” Hickenlooper aforementioned April 30 in Los Angeles. But, “they’re buried in debt!”
The following scenarios show the monthly compensation associated with different levels of student debt. The first envisages a 10-year loan at 6 percentage. To put the figures into perspective, a 30-year mortgage of $400,000 at current interest tax would cost about $2,000 per month.
In the second scenario, loans are shown over a 20-year term with tax at 7 percentage. Monthly payments are smaller but the overall burden is bigger, with total interest payments on $100,000 of debt rising above $86,000.