Debt Creates Long-Term Burdens for Student Borrowers

"Students at non-four-year, for-profit colleges have seen the largest increase in student loan debt among any group of student borrowers," according to the report. "In 2001, 62 percent of freshmen at these schools took out student loans—and just eight years later, that number jumped to 86 percent. These trends are a result of a lack of oversight of private lenders and the marketing practices of these loans by for-profit schools in particular."

According to Tobin Van Ostern, deputy director of Campus Progress, the youth-focus arm of CAP, for-profit schools also target minorities who are eligible for federal funding and then encourage them to obtain private loans as well.

Unfortunately, Van Ostern said, many of those students don't exhaust their federal loan options before turning to private loans.

For-profit schools have the highest dropout rates, and their dropouts have the highest rates of unemployment among all college dropouts.

Van Ostern thinks the bureau's proposal to increase regulations "is a good step," particularly for minority students who may come from families that are unfamiliar with both the college loan process and loans in general.

"Latinos highly value education and they understand the positive impact it can have on life," he said, "but they're not going or they think they're not able, and the reasons are usually financial."

The center argues that students are driven into accepting the first job offer they receive, even if it's low-paying or not in their field, because they must start repaying loans after graduation. As a result, the center says, this may reduce the number of young people who decide to start their own businesses because they are already struggling to repay debt.

Minorities are also less likely to graduate in four years, Van Ostern said, meaning they often need to take out additional loans to cover more years of school.

While a Pew Charitable Trusts project reports that most Americans earn more than their parents, it's worth noting that they're only talking in absolute terms. The study doesn't take into account the fact that it costs more money to live now than it did 50 years ago, and incomes haven't necessarily kept pace. Where a single income used to support many families, now it often takes two.

The sequester could also make the situation worse. While Pell Grants, which provide federal financial aid for students, will not be impacted this year, the program could see cuts in 2014. A reduction could increase the number of students seeking private loans. Other federal grant programs, such as the Teacher Education Assistance for College and Higher Education program, which provides money to students studying to teach in high-demand fields such as math or science, could be limited, as could federal work-study programs.

And yet it has become increasingly difficult to find well-paid work without a college degree. College graduates are twice as likely to find work as those with only a high-school diploma, according to the Bureau of Labor Statistics.

The bureau is currently seeking feedback on their proposal to regulate servicing companies. Go here for more information.

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