The student debts are rising according to a new report released on Thursday. The report noted the rising student debts are a result of borrowers struggling to repay rather than new loans being given.
A new report from credit rating agency Moody’s Investors Service that was released on Thursday is shedding light on the growing student debts. The report indicated the growing debt was due to people struggling to repay the loan.
The report noted that in recent years, the number of students intake in higher education had declined. They also noted that the tuition fees paid in these institutions had stabilized in the last few years. The report continued by saying borrowers had slowed paying back the loans, which will lead to the continued growth of student debts in the coming years.
The rising student debts
The report’s authors continued by saying,
Over the next few years, the combination of slow repayments and elevated, if no longer growing, levels of new borrowing will likely fuel further increases in outstanding debt.
The report indicated that one of the reasons for borrowers’ inability to repay the loans is the dependency on monthly salaries. The report noted that a majority of borrowers opt to extend their repayment periods. This helps them to have more money on their hands at the end of each month at the expense of repaying their student debts.
The result for this is a decreased amount of loan being repaid per month. This contributes to continued rising student debts.
The report also noted that student debts were the second-largest household debts in the US, with about two in three college seniors who graduated from public and private nonprofit colleges in 2018 had student debt.
Having student loans weighs a person down on their ability to advance their life. Student debts are able to determine if you will be granted other forms of debts, such as mortgages. This has lots of consequences for graduates who are starting and looking to build their lives.
Featured image as Pixabay
