A student loan is money lent to students or parents to pay for higher education, usually by banks or the federal government. The amount students borrow varies widely by school, program, and type of loan (take a look at this map.) Unlike with other types of loans, borrowers cannot refinance their student loans and cannot discharge student loans if they go bankrupt.
‘Student debt’ refers to the total outstanding amount owed by students, graduates, and dropouts from student loans. According to the Federal Reserve, national student debt now stands at approximately $1.2 trillion and is growing at $3055 per second (watch it here.)
Why is this important?
Student debt is a fast-growing problem. Approximately 70% of college graduates leave school with student loan debt, compared to less than 50% twenty years ago. Today, student debt is the second-largest source of consumer debt in the US, topping credit card and car loan debt, beat only by mortgages. Given rising costs of a college education and continued underemployment of college graduates, student loan debt is set to become a major issue of the 2016 presidential campaign— and it has the potential to become a crippling economic crisis.
Despite the recent 'College Scorecard' initiative, public information about student loans and debt is surprisingly (and frighteningly) limited. For example, though the federal government released data on average loans and earnings per college, it did not specify numbers across majors or programs. It also only included federal student loan borrowers.
The issue inspires much political debate. Senator Elizabeth Warren, for example, has spoken out repeatedly on the "affordability crisis" in higher education, calling in particular for refinancing allowances and greater transparency in federal loans. Candidates Hillary Clinton and Bernie Sanders vie on the issue as well, both hoping to cut student loans and increase college affordability. No Republican candidates have laid out comprehensive student debt plans as of now, but many have made statements on the issue, suggesting it will be a topic for both parties to consider in their primaries— and in the general election.
- State by state data on student debt
- MarketWatch's terrifying student loan debt clock
- The New York Times' student loan repayment calculator
- The Brookings Report on student debt
- Elizabeth Warren discussing student loans with Jon Stewart
- John Oliver's funny and informative bit on the topic