The Truth Behind the Student Loan Crisis Isn’t as Bad as You Think

With total outstanding student loans now topping $1 trillion, many have said it has now become a full-on crisis, but that may not be entirely true.

The rising costs of college need to be addressed by all parties, from educational institutions themselves to the Federal Government, and everyone in between. However, data has revealed the absolute importance of college, as those with college degrees in the recent Millenials generation can now expect to earn 50% more in annual salary versus those with some college or a two-year degree. This is a wide disparity compared to the Silents generation -- those born between 1925 and 1942  -- where a person with a college degree could expect to earn 15% more than someone without one.

In addition, the recent suit by the Consumer Financial Protection Bureau (CFPB) against ITT Educational Services highlights the need for students to be aware of both the true costs and benefits of the institutions they're attending, as it showcases some of the for-profit colleges are only seeking to enhance their bottom lines, and not the lives of students. 

In this segment of The Motley Fool's financials-focused show, Where the Money Is, banking analyst David Hanson is joined by Fool contributor Patrick Morris to discuss the student loan industry as a whole, plus the recent lawsuit announcement that sent ITT Educational Services stock tumbling and what it all could mean to investors and individuals everywhere.

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  • Report this Comment On March 15, 2014, at 2:58 PM, pafofecycuc wrote:

    You eliminate your student loan debt the same way you eliminate any other debt from your life - start spending less money. I would start looking at insurance costs (car) as they are a real killer in this country. You don't need an expensive policy from a place like GEICO, those guys charge way too much and most likely you will just be supporting their TV ads. Get a basic policy for around $25/month (check Insurance Panda for this) and then pocket the rest... our even better - use it to pay off your student loan debt.... or whatever other debt u have.

  • Report this Comment On March 15, 2014, at 8:23 PM, Girlfriday wrote:

    Is this SERIOUS? Not as big of a deal? The person who wrote tugs obviously didn't do the research necessary. 1. Who cares if you can make more with a degree when young adults can't even find jobs within their major? College graduates have been hit hard by the recession. 2. Many jobs specifically hire only college graduates for jobs you can be trained on the job to do, creating an environment that necessitates expensive college degrees. 3. The amount you can make, even if you can get a job, is often not enough to pay student loans. 4. Yes, education about loans and the cost of college is important, but most 17-18 year old kids don't have this knowledge. They are not counseled about it either. Most students are ill-prepared to make such decisions.

    The commenter above who suggested that students just pay less insurance doesn't get it. When you are just out of college and can't pay your 500 a month student loan bill on top of everything else, saving 20 bucks by going for cheaper insurance is a drop in the bucket.

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Patrick Morris

After a few stints in banking and corporate finance, Patrick joined the Motley Fool as a writer covering the financial sector. He's scaled back his everyday writing a bit, but he's always happy to opine on the latest headline news surrounding Berkshire Hathaway, Warren Buffett and all things personal finance.

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