Your Federal Student Loan Relief Is In Jeopardy

Wittten by Greg Pesetsky on June 8th, 2012 | Filed under: Uncategorized

Prices are going up; that’s no surprise for anyone, really. Inflation is a reasonably natural phenomenon that takes place over what is hopefully a significant amount of time. But what on Earth do federal student loans have to do with inflation? Everything and nothing. Tuition prices have skyrocketed over the past few years. That’s primarily a result of the fact that students have ready access to student loans. After all, if student loans didn’t exist, people would be hard pressed to come up with the tens of thousands to pay and schools would drop their prices as a result. What’s more, if government backing of those loans didn’t exist, interest rates would be prohibitively high, which would also lead to a drop in tuition prices.

Making Sense Of It All

It probably still doesn’t make complete sense. After all, you are likely a graduate of college and are already stuck with those federal student loans. You might be under the impression that these tuition hikes won’t have any bearing on your life.
If you have watched the news recently, chances are that you’ve heard some rumblings about the student loan bubble. For those of you who aren’t aware of what they’re talking about, it’s essentially a parallel being made to the housing bubble.
With the housing bubble, prices were being inflated because people with insufficient credit were being granted huge loans that banks knew couldn’t be paid back. As a result, everyone had pre-approval for hundreds of thousands, despite not having more than a few dollars in their checking account. A very similar fiasco is going on within the realm of student loans.
Within the realm of federal student loans, the problem begins with a guarantee. Because the government backs many of the loans being made to students, the banks feel safe enough to issue huge amounts of credit to people who haven’t a dime to their name. Because students can pay more, thanks to those inflated loans, the schools continue to push tuition prices up. However, the worry is that the bubble will pop when too many graduates default on their loans and the government hasn’t the cash to stand behind them.

Get Relief From Your Federal Student Loans Today

If and when the federal student loan market bursts, that will be the end of any federally promoted student debt relief program. You can say bye bye to the huge percent of income savings you could have realized along with the complete discharge of your loans you would have benefited from just a few years down the line. Time is of the essence.

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