(Buffalo, N.Y.) – Student loan debt reached $1.3 trillion in 2015, which has surpassed what Americans owe in credit card debt, and some experts have called the situation a national crisis.
Some economists have warned that college debt could lead to a financial crisis worse than the housing bubble of 2008, which dragged the country into a recession.
During a recent visit to Buffalo, Susan Keating, the CEO for the National Foundation for Credit Counseling, said rising student debt is dragging down the U.S. economy by hampering new car sales, the real estate market and overall consumer spending.
More than 12 million borrowers are either in default or delinquent on their student loans, said Noelle Carter, the chief administrative officer from the Consumer Credit Counseling Service (or CCCS) in Buffalo. The group assists graduates and parents who are facing difficulties paying back student loans.
“We’re not saying is that a college degree doesn’t have a great value,” said Dr. Fred Floss, an economics professor at SUNY Buffalo State. “We shouldn’t be scaring people into the idea they shouldn’t come to Buffalo State or any of the colleges or universities because if they don’t, they’ll probably make $5 million less over their lifetime in earnings if we look at the national numbers.”
Carter agrees that a college degree is still a valued investment.
“What is important to look at is that the degree is worth obtaining, but try to think about what future job prospects you have and what your earning potential is compared to what you’re agreeing to take on in debt to get that degree,” said Carter.
While heading off to college can be an exciting time for a young adult, Carter said students and parents should be cautious about the kind of loans they are agreeing to.
“The key education lies before enrollment into a college or university,” said Carter.
Carter said high school students aren’t given enough information about their loan repayment responsibilities prior to applying to colleges. “Private loans can be especially troublesome because there are less repayment options available,” she said.
Carter’s best advice? “Not to ignore the issue,” she said. “You need to be reaching out to your college’s financial aid office, or the credit counseling service to meet with a counselor. There are options to reduce your payments there are forgiveness options.”
“We’re really putting the burden of college education on the poor and they’re not having the chance to pay it back,” said Dr. Floss. “The wealthy don’t have that problem.”
* Producers Clifton Robinson and Maris Lambie contributed to this report.