Certainly one of the more clever solutions to student debt is the recent move by Occupy to buy out the debts of a number of people struggling to pay back student loans. Occupy managed to kill off almost $4 million in student debt by buying the debts from loan collectors for pennies on the dollar and forgiving them. It recently bought $3.8 million in student debts for just $100,000 and forgave it all.
Occupy and others have been making lots of noise about the student debt crisis in the U.S. for the past few years. There’s no doubt that a significant number of young people are being crushed by payments on the loans they took out to pay for college. But is this really a crisis at a national level? A recent study by the highly respected Brookings Institution suggest the answer may be no. Among Brookings’ findings:
- Only 7 per cent of households with young adults in debt owe $50,000. or more on education loans. 56 per cent of these households have less than $10,000 in school debt.
- In households with people aged 20 to 40 who have education debt, the median debt is just $8,500.
- The share of income that an average American with education debt must put toward loan payments is actually lower today than it was 20 years ago.
- At private schools, the overall cost of college is going up more for well-off students than for less advantaged ones who often receive scholarships and discounts.
- Finally, because the incomes of college graduates are continuing to rise, the return investment on a college degree has continued to improve for most graduates.
In terms of ability to pay back student loans, the biggest problem is actually with those who borrow for school but don’t complete a degree. They may have smaller debts, but they’re unable to find any employment to generate the income to pay them back with. Unfortunately, there are quite a few colleges out there that graduate less than half of the students who enroll in their programs.