Credit counseling agencies are nowadays keeping their eye on student debt. Of late, credit counselors have been seen exploring new opportunities. Credit counselors are those pillars of our society who help people budget their money and pay bills. Today, they have been witnessed digging their way to the student loan arena as well.
A post by Herb Weisbaum, NBC News contributor reveals that, “Nearly 7 million Americans have fallen behind on their student loans, and millions more are barely able to make their payments each month.” To solve this, credit counselors are heading towards student loan debts. This they explained, as a symbol to help students.
Student loan debt on the rise
Student loan debt is a common phenomena in the west. A college graduation degree followed by joblessness, help the students to mount up debts. In America, the cost of higher education is rising at a lightening speed. Student debt has incremented drastically over the past several decades. Federal Reserve Bank of New York, states that at the end of 2014, student loan delinquencies have increased which pictures that Americans are lagging behind payments as education debt climbs.
The total volume of incipient student borrowing has incremented more than fourfold over the past 20 years. More students in higher education results to the aggregate increase in student debt. Studies unveiled that all other forms of debt, such as, credit cards and mortgage loans have been exhibiting lower delinquency rates. The result of an Experian’s study brought to light that, “in total, $1.2 trillion is bleeding students dry”.
Day-by-day, more students are being pushed into the dark fissure of student loan debt. As an explanation to this, Fed researchers wrote: “Student debt is not dischargeable in bankruptcy like other types of debt. Delinquent or defaulted student loans can stagnate borrowers’ credit reports”.
Fed’s data showed that until 2009, student loans were the minimal form of household debt. The recession has allegedly shuffled the borrowing habits of the Americans and made them borrow money for education. Probably this was not the situation ahead the great recession, which had knocked down US in the year 2007. Thereafter, the residents have managed to pay off their debts, except student debts. This made them land in a pool of student debts.
Conquer student debts with the help of credit counselors
Today, student debt tops the debt chart. The recession has made inroads for the student debt to walk through the lives of the people of US. As a result of this, debts other than the student debts were paid off, but the latter remained at the same place. Thus, people got more tangled into student debts.
The college graduation degree paves the way for a high paying job and a carefree lifestyle. But unfortunately, there are millions of Americans still battling with the burden of student debt. Following this situation, a brand new enterprise has originated, which offers a good deal to cope up with debt. They can be called the credit counselors or credit counseling agencies who try to reduce or even eliminate debt from regime-backed student loans.
Why credit counselors set out for student debt?
Studies revealed that, along with student loan debtors, the credit counseling agencies are also facing a strong financial crux. “According to the annual reports filed with the IRS, annual revenue for the 10 largest counseling agencies fell 11% in the 2013 fiscal year... That came after a 15% decline the year before.” Irrespective of the scenario, it’s arduous to cut down the expenses. Side-by-side, income fell and the pay for the organization’s top executives rose to 8%. Credit card default rate showed 2.52% at the end of 2014 and default rates on debt also showed low, which has made fewer people to step in the agencies for help.
Kevin Weeks of the FCAA said that, “Bankruptcies are trending down, foreclosures, credit card delinquencies are low... agencies are looking for opportunities to assist more consumer”. Both the credit counseling organizations - NFCC and FCAA are paving their way into the orbit of student loans. According to Week, “Member agencies charge student loan counseling fees of $149 to $299 for what is usually a series of consultations with the borrower”. It is true that, people can solve their debt problems, but there are certain areas where they need help. Credit counselors are mainly trying to get hold of those weak units where folks want their help. They are doing so because, somewhere or the other the colleges, lenders and the federal government all have a stake in the student loan system.
Every citizen has a right to good education and for that, they are taking out loans. In the USA, education loans or student loans are sky-high. Masses are still at a warfare with their student debts since they are unable to repay their loans due to lack of employment and good wages. Millions are there who default on their student loans. And, the credit counselors and their organizations are using this opportunity to fill their half-filled pockets as an emblem to help out the student clan from their agony of student loan debts.