The latest reports suggest that around 70% students will take minimum of 12 years time to pay off their student loan. This is mainly because the amount of student debt has increased rapidly over last few years. Today the whole amount of outstanding student loan is bigger than the combination of auto car loan and credit card loan. This new financial crisis is the biggest threat on the global economic scenario.
Reasons behind this threat
The economic meltdown in recent years is the major factor behind the rise of the student debt. The banks all over the world emptied their funds to help the students to pursue higher studies. The monetary benefits provided the students the opportunity to get admitted in the reputed universities.
But the sudden turn of events changed the job market scenario. Most of the business firms cut off their resources and the others restricted their vacancy limits. This had left the students unemployed. They found it hard to get a good job and failure in finding it made them disappointed.
Those who took financial help to study felt the hardship. It had become impossible for them to pay off the debt without any healthy monthly salary.
Another major factor for rising student debt is the failure of the co-signers in clearing the outstanding loan. The huge burden of loan in their retirement life is a hardship for them. The retired life enjoinment has silently evaporated from them. They are now about the face the lifetime burden of student debt with nothing to relieve them from there.
The rise in tuition fees in education institutions has also fuelled the economic crisis. It is now literally impossible for the students to bear the increased cost in this crisis situation. This has made the students to look others ways to get financial help. The additional monetary help may come fruitful at first but in the end it doubles your debt. This way the student will bear the debt for rest of his life.
Ways to get out of the threat
There are basically three ways to get out of the heavy student debt.
The first helpful program to get away from debt is rehabilitation. It helps the debtor to arrange a certain payment from the whole loan in 10 months time. If the student succeeds in meeting the deadline then he will be given a minimum of 10 years time to clear his entire loan.
The second process is reinstatement that enables the student to pay certain amount in consecutive six monthly installments. This step will determine whether you are eligible to receive federal benefits or not. It is found out that maximum student quickly clear this step to stretch their duration of payment.
The third program is consolidation. This plan helps a student to get direct loan help from the government department of education. It is a great way to come out from the defaulted student loan status. Capturing the direct loan means that the student is now in position to clear his former debt.
