Educational Loan Debt For The Nation 's Largest Source Of Non Mortgage Debt

1857 Words Nov 20th, 2015 null Page
Background
The analysis in this paper focuses on federal educational loans by race. Educational loan debt accounted for the nation 's largest source of non-mortgage household debt in 2014. The intention of federal educational loan programs was to lessen credit constraints, for borrowers who internalize many of the benefits of education. Most of educational loans in the United States are federally guaranteed or direct loans made by the Department of Education. Under this system, postsecondary institutions make loans under federal lending rules. The Department of Education uses private servicing contractors for the loan servicing.
The return on investment for a college degree has grown, however the cost of higher education has increased at a faster rate. The growth in tuition and fees has led to an increased need for students to take on educational loans to fill in the funding gap; federal loans now make up 45% of student aid packages (Baum & O’Malley, 2003). Educational loan debt has transitioned from an individual problem to a societal one. Over 35 million Americans are currently paying off educational loan debt (Williams, 2014). In 1982 student loans began to increase while federal, state, and private grants shrunk (Elliott, 2014). Student loans have become the primary financial aid tool for funding college. The shift in funding for higher education resulted from the view that a degree is a personal investment and the student should bear the burden of the cost not…

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