Many student loans being issued by private lenders are being defaulted on at an alarming rate. This is similar to the housing boom that inadvertently caused the great recession of 2008. Lenders are issuing loans to students that have virtually no income and limited ways to pay it off, and the ripple effect is now impacting not only the millennials but generation Z as well. With so many “pop up” colleges now offering their own financing options, many students are going into debt for not only a few thousand dollars, but in some cases a few hundred thousand dollars, and this is having a big impact on the economy’s rental market.
Why student loan debt affects the economy’s rental market
Because students are taking out student loans with such large balances, they are facing enormous debt with limited income upon graduation. And having this large looming debt hanging over their heads is causing young adults to continue to live in apartments or to continue renting rather than buying a home for a longer period of time. It is now common for many young adults to be paying student loan debt off up until the age of 30, preventing them from wanting to take on an additional large debt with a mortgage. The resulting crowded rental market is causing the rental prices for even basic rentals to skyrocket and placing a further burden on younger adults and families struggling to obtain home ownership. With the average college graduate not buying a home for almost 10 years post college, it’s no wonder the amount of student loan debt is impacting the economy in a harmful way.
What 90% of students don’t get told about their student loan debt
Most people never get straight forward information regarding their student loans, and unfortunately the topic that seems to be avoided the most is that of the repayment time frame and the consequences of not paying on time. Additionally, most loans come with interest, and the student usually does not realize the true impact of such interest until it becomes time for them to start repaying. For some, the debt and additional interest becomes so overwhelming that they will never be able to fully repay it. This has become a major issue between many newlyweds as they find out their significant other is carrying a significant amount of student loan debt with them into the marriage, which tends to have significant impacts on the couple’s ability to buy a new home, a new car, or do anything else that requires credit.
Questions every student should ask before taking out a student loan
Is this loan federally insured? (Meaning it’s not interest bearing)
Does the loan give me options of repayment if my income is not where it needs to be to repay?
Does the loan incorporate living expenses and how much per month are you allocated?
Will my loan be sold off after I take it out? And if so, what company?
Does this loan cover everything including the supplies, room and board, and the entire coursework I’m applying for?
What happens if I need to take a break mid-course? Would I need to reapply?