Teaching Tip: CBS News has a video of the article “The Crushing Impact of Student Debt” available online (http://www.cbsnews.com/8301-18563_162-20126148/the-crushing-impact-of-student-debt/). The video is only about two and a half minutes long and is a good way to begin a class discussion.
Finance in the News & Class Discussion: According to USA Today’s recent article “Student Loans Outstanding Will Exceed $1 Trillion this Year,” drives home the fact that by the end of the year, the size of student loans outstanding will cross the $1 trillion mark. That’s an attention grabbing headline. It’s hard to get a grasp on how much $1 trillion actually is, but to put it in some perspective, it’s more than Americans owe on credit cards.
As you probably already know, the cost of education has been going up dramatically in recent years, and with it, the amount of student loans has also climbed. As shown in the graph in the USA Today article, student loans have doubled over the past 10 years, and that’s after taking inflation into account.
An accompanying article in USA Today, “For-profit Colleges Focus of Student Loan Issue,” looks at for-profit colleges like the University of Phoenix and DeVry University because about half of all federal student loan defaults occur at for-profit schools, while only about 10% of college students go to those universities.
- The article “For-profit colleges focus of student loan issue” has a graph of default rates on federal student loans by state. Where does yiour state rank and why do you think Arizona leads the country in student loan defaults? Be prepared to discuss this in class.
- What experiences have you had with student loans? If you have student loans, are you concerned you won’t be able to pay them back? Be prepared to discuss this in class.
- When is a student loan considered in default?