$80 Billion a Year for College Loans
The college loan market is a boom market for lenders. Parents are burdening themselves with massive debt, despite their lack of savings for retirement.
A July 11 story run by Bloomberg reports the following:
Soaring tuition costs are driving the boom in federally financed and private loans, 75 percent of which Wall Street transforms into debt securities. About $44 billion of bonds tied to student loans were sold in the first half of 2006, Moody's Investors Service says. At that rate, sales will top the record $73 billion of last year.
Lenders are happy to lend. These loans are usually repaid. But given the grim fact that over half of all college freshmen fail to graduate, the college education game is a huge crap-shoot that is rigged against debtors.
The use of private loans to finance college costs has grown more than ninefold during the last decade to $13.7 billion as of the 2004-2005 academic year, the College Board said. That makes it the fastest-growing source of funds for students.
"The cost of education has been increasing significantly while the level of federal loans and grants has been fairly static," said Jack Kopnisky, chief executive of First Marblehead, which bundles debt into bonds. "Private student loans fill that gap."
Borrowers may not be aware that student loans cannot be eliminated through bankruptcy. No wonder lenders are ready and willing to lend!
Yet none of this debt is necessary. For proof, see www.LowestCostColleges.com.