“College graduates are defaulting on growing amounts of the staggering $1 trillion in student loans in the United States, and some universities are suing to get their money back.
Well-known schools among those filing suit for nonpayment include Yale, the University of Pennsylvania and George Washington University, NBC News reported.
College students are defaulting on nearly $1 billion in federal student loans earmarked for the poor, which could jeopardize the revolving Perkins loan fund intended for those with extraordinary financial hardship, according to Bloomberg.
Unlike most forms of debt, student loans cannot be forgiven even by declaring bankruptcy. Colleges are obligated to recover the money on behalf of taxpayers, according to Bloomberg.
“With $80,000 worth of debt, even if you get a job that pays $60,000, which is about the average for a lot of college-level jobs, you’re still below the water and the potential for you to default is much higher,” Jonathan Robe, research fellow for the Center for College Affordability and Productivity, told Fox Business Network.
“I think that’s what’s happening here — the students feel like they just flat out don’t have the money.”
At public universities, enrollment declined slightly in 2012 to 11.5 million students, but state and local support per student declined 9 percent to $5,896 per student, the lowest level in 25 years, according to the State Higher Education Executive Officers Association.
Even as student loans are going bad at a growing rate, the demand for student loan securities by investors remains high….”
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