Student loans, student defaults, and unemployment among recent college graduates have been intensely discussed because of the economic upheaval of the past few years.
A mid-2012 briefing paper by the Economic Policy Institute suggests that young people, including those with a college degree, face an unemployment rate that is double that of the older generation. This unemployment is not because they lack the skills for a given job, but because there are just not enough jobs in the market.
“Recent college graduates have entered an enormously difficult job market, which poses particular challenges for those who need to begin paying back student loans. The unemployment rate for young college graduates in 2011 remained high at 8.8 percent, a slight decrease from 2010, which saw the highest annual rate on record for this group (9.1%),” the Institute for College Access & Success states in an October 2012 report.
Student Loan Consequences
“Defaulting on a loan has several serious consequences including adding significantly to the cost of a loan and ruining the borrower’s credit score,” the Institute for College Access & Success states on its Project on Student Debt website.
In July, the National Consumer Law Center (NCLC) released a report titled “The Student Loan Default Trap.” This report draws attention to the consequences when defaulting on a student loan.
“The stakes are high because vulnerable students attempting to better their lives face severe consequences if they default on federal student loans. The government has nearly boundless powers to collect student loans, far beyond those of most unsecured creditors,” according to the NCLC report.
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