Student debt is up over $7.5 trillion this year, a 10-year high, as more Americans are relying on financial aid and more are saddled with debt that is difficult to repay.
The national student loan industry has been in a free fall since the 2008-2009 recession and the credit union industry is expected to continue to shrink in coming years.
According to the U.S. Student Loan Data and Forecasting Project, total student debt increased $9,542,000, or $6.8 billion, in 2016, from $739.8 million, or about $5,400 per borrower.
The number of borrowers with student debt has declined by 1.7 million in the past three years.
“Student loan debt is the most costly type of consumer debt to carry,” said Tim O’Brien, CEO of Credit Union America.
“We’ve seen students who can’t make payments on their loans get caught up in the debt game and lose their home, lose their job and their savings, which in turn hurts the economy.”
“If the student loan debt industry was to reverse its downward spiral and find a path forward, the industry would likely grow and thrive,” said Matt DeCarlo, Senior Policy Analyst for the National Credit Union Administration.
“Credit unions, the nation’s largest student lender, have done everything possible to help borrowers avoid their loans, but now that the recovery is underway, it is up to students to ensure that the economy is stronger and more resilient.”
As more Americans rely on financial support and find themselves paying higher interest rates, the cost of borrowing has also skyrocketed.
According the federal government, total private student loan balances rose $5.5 billion, or 24 percent, in the first three months of 2017.
The largest increases were seen in the number of students with student loans, up by 2.6 million in 2017 from the previous year.
This increase was partly offset by the fact that the average monthly payment for students with a private student debt was up by about $600, according to the National Consumer Law Center.
According O’Malley, there are many other costs associated with student loan payments, including interest, fees, and taxes.
“These are just a few of the costs that students can expect to face in the future as the student debt crisis continues,” he said.