On July 1, interest rates on Stafford student loans doubled from 3.4 percent to 6.8 percent because Congress could not come to an agreement before the July 1 deadline.
According to a New York Times editorial, “This increase in costs comes at a time when college debt has already reached record levels, damaging the economy and hobbling young graduates. It also draws attention to the fact that the federal government is making quite a lot of money from the loan program. An analysis by the Congressional Budget Office estimated that the new, higher rate would earn the government about $184 billion over the next decade, after taking into account program costs, including potential defaults.”
But Wednesday, by an 81-18 vote, the Senate approved a bill to tie federal college loan rates to financial markets and offer borrowers lower rates this fall, essentially rolling back the July 1 interest rate hike. The bill is expected to gain approval from both the GOP-controlled House and President Obama.
So how much do you know about the state of student loan debt in the U.S.? Take this quiz and find out.
A) $900 billion
B) $1 trillion
C) $1.1 trillion
D) $1.3 trillion
The current outstanding debt owed by students and graduates in the U.S. sits at roughly $1.1 trillion. To put that into perspective, that amount is greater than all the credit card debt in the nation combined.
A) 57 percent
B) 68 percent
C) 70 percent
D) 90 percent
In 2013, 70 percent of graduates will have student debt to pay off.
$35,200 -- a number large enough to make any graduate's jaw drop.
A) 3.2 percent
B) 4.3 percent
C) 5.4 percent
D) 6.8 percent
Congressional deadlock led to the doubling of interest rates from 3.4 percent to 6.8 percent.
A) 10 percent
B) 14 percent
C) 17 percent
D) 20 percent
The delinquency rate stood at roughly 17 percent, up from around 10 percent in 2004. If you omit loans in deferment, the number jumps to almost one-third.
A) Stayed the same
Statistics show that from 2004 to 2013 total student debt has grown by $986 billion, nearly tripling in size.
A) $100 billion
B) $150 billion
C) $200 billion
D) $250 billion
Private loans are the least attractive option for students, often coming with much higher interest rates and stricter repayment timetables. However, students can't always qualify for enough federal loans to cover the cost of education, so they have turned to private loans and have accumulated $150 billion in debt.
A) 5 percent
B) 7 percent
C) 10 percent
D) 17 percent
Ten percent of students and/or graduates owe over $54,000 in loans. Three percent owe at least $100,000 and 1 percent owe at least $200,000.
A) 40 percent
B) 50 percent
C) 60 percent
D) 70 percent
In 2004, 26 percent of 25-year-olds held student debt. Nine years later, that number has jumped to 40 percent.
Student debt can be dismissed if someone declares bankruptcy.
In 1976, Congress amended the Higher Education Act, banning federal student loans from being discharged when a person files for bankruptcy. In 2005, private student loans were banned as well. On rare occasions, student loans are dismissed if the person filing for bankruptcy can prove "undue hardship."