1. Bigger than Most Countries
Currently, more than 40 million Americans hold student debt. The population with student loans is actually greater than the entire population of Canada, Poland, North Korea, Australia and more than 200 other countries. It's also about four times greater than the population of Sweden.
2. Giant Corporations can File for Bankruptcy, but Bankruptcy is Not an Option for Student Borrowers
Let freedom ring! Earlier this month, Freedom Industries, the company responsible for a chemical leak which contaminated drinking water in West Virginia, filed for Chapter 11 bankruptcy protection. The company faces 25 lawsuits, but by filing for bankruptcy protection, Freedom Industries is able to halt most litigation.
Unfortunately, if Americans with student loan debt find themselves owing money on their student loans, it is nearly impossible to file for bankruptcy. In fact, debts from gambling and other consumer debts can be erased, but not education debt. These debts can continue to grow when a borrower is unable to pay, and can even follow a borrower to the grave.
Removing bankruptcy protection from student loans has only benefited the lenders. In a leaked memo, Sallie Mae officials have listed preserving the inability to discharge education debt in bankruptcy as their second-most important goal.
3. Seven Million Defaulted
Out of the nearly 40 million borrowers, about seven million have defaulted on these student debts. Translation: 7 million (or about 2 percent of the population of the United States) have had their credit trashed as a result of their student loans and can have 25 percent in penalties added onto their total loan debts. To add insult to injury, about 60 percent of employers run credit checks on applicants before hiring or promoting, making it close to impossible for millions to get a higher paying job to actually repay these debts.
4. Average Student Debt Increases While Wages Decrease
Since 1999, student debt has increased more than 500 percent. Unfortunately, average salaries for young people have not. In fact, since 2000, the average salary for young people has decreased by 10 percent. It's no wonder that we are seeing millennials delaying starting families, making car purchases and buying homes.
5. Your Student Loans Could Make You Unemployable
With seven million Americans defaulting on their student loans, this also means that seven million Americans will have their personal credit plummet and be deemed un-hireable by many employers as a result. Once a borrower has defaulted on a student loan, this can also result in automatically becoming ineligible for some government jobs.
Think it just ends with your credit? Think again. Don't expect your alma mater to release your official transcripts to potential employers wanting to verify your education. The Department of Education actually encourages schools to withhold transcripts of those that are behind on payments. With many different jobs requiring official transcripts, it certainly makes it harder to get a higher-paying job and to pay off student debt when your alma mater is holding them hostage.
6. Lose Your License
Yep, you read that right. So, even if you aren't looking for a job, you can lose the one you currently have. If you default on your student loans, you can be stripped of your professional license and, in one state, even have your driver's license suspended as punishment. In 2011, 42 nurses in Tennessee had their nursing licenses suspended for defaulting on their student loans.
In the most recent three-year cohort default rates (CDR) released by the Department of Education, 1,367 people from 2011-2014 are currently in default in the state of Montana- more than double the amount from two years ago. Unlike in other states, in addition to being able to have their professional licenses suspended, according to the Montana Department of Justice, people behind on their payments are also subject to their drivers license being suspended.
7. Families Have Inherited Student Debt of Deceased Loved Ones
It doesn't always end when a borrower dies. Though student borrowers with federal student loans no longer have to worry about this, private student loans can be transferred to family members once the borrower is deceased. One example of this is the Bryski family.
In 2004, Christopher Bryski suffered a traumatic brain injury and later passed away. After his death, his private student loans were then transferred to his family. The Bryski family has since worked with legislators to continue to introduce and re-introduce legislation that would prevent this from happening to other families. Most recently, HR 2961: The Student Loan Protection Act of 2013, AKA, "Christopher's Law." If passed, Christopher's Law would help families like that of Angela Smith. In 2008, Angela's son, Donte was killed, his debt lived on.
8. Delaying Starting Families and Major Purchases
According to a report by Young Invincibles, since 2002, the debt-to-income ratio of an average single student debtor has increased from .43 to .49 today. This has resulted in many people being disqualified for first-time home mortgages. The National Association of Realtors has also cited student loan debt as a reason for a decline in housing purchases among first-time buyers. It doesn't stop there either. Student loan debt has also been cited as a major reason why millennials have delayed car purchases and even starting families.
According to a report by the One Wisconsin Institute, the impact of student debt translates into over $6 billion in lost automotive sales each year. General Motors is also taking note. Recently, Dr. G. Mustafa Mohatarem, the chief economist for General Motors, cited student loan debt as a one of the major reasons why Millennials are not purchasing cars.
9. Interest Rates Can Only Go Up
As of this past summer, interest rates for student loans increased again and will be based off the 10-year Treasury note rate. Instead of a fixed rate, students are stuck pay with a fluctuating interest rate that can jump up to 8.25%-10.5%, depending on the loan.
10. The Government Profits From Student Loans
If the Federal Government were a private company, it would be the most profitable company in the world. The Congressional Budget Office projects that the Federal Government made about $50 BILLION on student loans in 2013. This is $5 billion more than ExxonMobil, the most profitable company in the country in 2013.