The Debt For Student Loan Threatens And Impacts The Us Economy To A Great Extent

August 7, 2013 6:00 am 0 comments

The federal government of USA decided to grant loans to student in the year 1965, which is still continuing. The students were granted loans, so that they can study in the college and repay the loans when they find a job. However, it is this program that has turned out to be a pain in the neck in today’s economic condition of America. This is because it is these loans that are threatening the US economy. There are of course several reasons why such a situation has aroused today. A brief study will indicate the reason why the student loans are keeping the condition of the economy down.

Increased Rate Of Interest:

Recently, the rate of interest on the student loan has been increased to 6.8% from 3.4 %. This is indeed a huge rise, which has made it very difficult for the students to repay the loan.

  • The change in rate will make it students to pay extra $1000 every year for every loan.
  • These student loans have thus surpassed the auto loans and the credit loans, as a whole.

Thus, the explosion of the debts has definitely led to the increase in the burden of the tax payers making it very difficult to recover the loan. As a result, the economy of the country will be worse affected.

Increased Rates Of Unemployment:

Well, there was a time when studying in colleges gave the possibility of plenty of job opportunities. As a result, larger numbers of people seeking loans today has increased. However, the situation has become difficult today because

  • There is no good source of jobs through which the debts can be fulfilled,
  • The cost of the monthly payments are higher due to which these students cannot contribute to the economy,
  • Painful lessons in math and economics.

This had badly created an impact on the economic condition of the country.

Economy Is Recessing:

The economy is still in the phase of recovery from recession. This in turn, will worse hit all the citizens of the country including the students, as well. Consequently, the economists have estimated that the national student loan can be harmful not only for the economy but also for the students, as well. In fact, it has created a terrible impact on other sectors including

  • Housing,
  • Banks,
  • Entrepreneur risk taking
  • Retirement
  • Tax payers.

Since most of these loans are paid by the government, people associated with these sectors will be hurt badly.

The crisis of student loan is fast and is also the most unregulated one. The consequences for the economy will also be far reaching and these will prevent the students from making promissory notes. Most of the students are also looking forward to defer the loan payments. These might be mainly because of high interest rates or unemployment. This also indicates that unable to pay the loan, the students are unable to spend money on other goods and services. Thus, it will create an impact on the economy definitely.

Kevin Craig has written this informative article. He is a financial writer associated with He has been providing advice on finance since 2005.

Leave a Reply


Other News

  • Christian Persecution World Russia Declares ‘Holy War’ On Islamic State

    Russia Declares ‘Holy War’ On Islamic State

    The Orthodox Christian Church, which is reclaiming its traditional role in post-Soviet Russia, has just described its government’s fight against the Islamic State and other jihadi groups in Syria as a “holy war.”

    According to Vsevolod Chaplin, head of the Church’s Public Affairs Department,

    The fight with terrorism is a holy battle and today our country is perhaps the most active force in the world fighting it. The Russian Federation has made a responsible decision on the use of armed forces to defend the People of Syria from the sorrows caused by the arbitrariness of terrorists. Christians are suffering in the region with the kidnapping of clerics and the destruction of churches. Muslims are suffering no less.

    This is not a pretext to justify intervention in Syria.

    Read more →
  • 2nd Amendment Faith Oregon Shooting – When Tragedy Happens Let’s Focus On The Cause And Not The Tools Used

    Oregon Shooting – When Tragedy Happens Let’s Focus On The Cause And Not The Tools Used

    While the blood was still dripping from those martyrs who, in front of an evil man armed with a gun, asked them if they were Christians and those strong in the faith said they were. He shot them in the head. While those who were lost or weak said nothing he spared their lives and shot them in their legs.

    Barrack Hussein Obama angrily ran to the cameras to use this opportunity to say that guns being in the hands of the law-abiding Americans is the problem, and we need to restrict the 2nd amendment to spare the lives of “we the people.”

    This is nuts; guns do not kill people, people kill people! You can test this fact in your own home right now. (Do not worry no one will get hurt).

    Read more →
  • 2nd Amendment Faith Gun Free Zones Are Killing Zones

    Gun Free Zones Are Killing Zones

    How did you feel when you heard of the shootings in Oregon this week? Was the first thing that came to your mind the thought that if we only had stricter gun control legislation, this kind of tragedy could have been prevented?

    If you listened to idiotic liberals, like President Barack “Insane” Obama, you might believe that. It is my contention that liberalism is a mental disorder based on the rejection of God and His principles, and extreme irresponsibility.

    Read more →
  • National Where’s the Beef, in Republican candidates, in 2015?

    Where’s the Beef, in Republican candidates, in 2015?

    What type of Republican Leader do you want in 2015?

    As we look at elections coming up quickly in 2015, as well as the very important 2016 election cycle, what type of “Republican” leaders do you want to shape the future of your county and country?

    Do you ever wonder why it is that the current crop of Republicans are not declaring, at every media interview, “These ills have been brought to you by the Democrat Party!” when speaking of Obamacare, the hordes of immigrants being allowed to destroy our country, the Iranian nuclear treaty, the “Black Lives Matter” racial division rhetoric, the attack on the defense of marriage, the 94 million Americans not currently in the work force,

    Read more →
  • National Child protection services Sentences Baby To Death ON 9/11/2015

    Child protection services Sentences Baby To Death ON 9/11/2015

    Child protection services should be self-explanatory based on the simplicity of its name. But they are doing exactly opposite of their name in many places. Wynne, Arkansas is one such place.

    A baby has been sentenced to death and will be executed on Friday, September 11, 2015 and Arkansas Department of HUMAN SERVICES (DHS) – Division of Children and Family Services- Central Office will facilitate the delivery of the baby’s 10-year-old to the abortion clinic.

    On August 29, 2015 20-year-old Justin Smith was arrested and charged with three counts of rape and one count of endangering the welfare of a minor. His “alleged” victim is a 10-year-old.

    Read more →