A report from the Federal Center for Educational Statistics (FCES) has raised concerns about the increasing number of college students that resort to private loans in order to support their education.
This is in light of a study conducted by FCES1 showing a nine percent increase in private debt from 2003-2004 to 2007-2008, while government loans and subsidies have only increased by three percent in the same comparison of time periods.
The study also shows that students of for-profit universities that took out private loans have more than tripled when comparing 2003-2004 to 2007-2008. The report from the FCES also added that the higher tuition rates of for-profit universities can be correlated to higher private borrowing rates as well.
On the other hand, 53 percent of dependent graduates that obtained private loans in 2007-2008 alone had already borrowed the maximum amount available from federal loans. Undergraduates also account for the largest growth in student borrowing with graduate students next in line. Doctorate candidates, however, have seen unchanged borrowing rates since 2003.
The implications of the FCES report are disturbing, especially since high unemployment rates crush students with accrued interest rates. The fact that student loans cannot be discharged by bankruptcy also means that these students will have these debts weighing them down until they pay them off.