The student loan debt crisis: How it started and where it's going

This guest post is contributed by Katheryn Rivas, who writes for online universities blog.  She welcomes your comments at her email Id: katherynrivas87@gmail.com.

If you have student loans or if you keep abreast of current events, you've likely heard the statistic that for the first time in history, student loan debt has surpassed credit card debt, closing in quickly on a trillion dollars. Many economists fear that the next debt crisis will be a fall out from student loans, as tuition and student loan interest rates skyrocket and as college degrees become increasingly necessary entrance tickets to the workforce. Making matters worse is an employment landscape that is especially bleak for young graduates.

Over the past two years, student loans have been hotly contested in the media and among average citizens. In fact, one could argue that a very significant part of Occupy Wall Street was composed of students who felt helplessly engulfed in student debt that they couldn't afford to pay back. The reasons for mounting student debt are various, but perhaps the biggest reason is that tuition rates are far outpacing the rate of inflation. Even state university tuitions, which typically have been drastically lower than private university tuitions, are unaffordable for the average family.

Completing a college education, for the average American, necessitates taking out on average $23,000 in loans for a bachelor's degree. Because student enrollment in college is so high, a bachelor's degree, while certainly a requirement for most good jobs, is not necessarily a guarantee of securing a good job as in the past. There are just too many bachelor's degree holders out there, all competing for a small number of jobs. Another factor in the student loan debt crisis is that students, who are often a mere 18 or 19 years old when taking out these crippling loans, don't necessarily always understand the magnitude of their decision nor the precise terms of repayment.

There's been talk in the media, too, of a student loan debt bubble similar to the mortgage crisis, which was responsible for igniting our current economic depression. While there's certainly something to be said for this theory, it's unlikely since, unlike subprime mortgages, student loans are mostly backed by the government, and the government often goes to extreme lengths to guarantee repayment, even if it means wage garnishments, tax levies, repossession of homes, etc.

Essentially, student loan debt won't bring our economy down to its knees, but it certainly has kept our economy down since so many former students are paying back loans instead of putting money into the economy by making purchases. Congress has discussed various ways of fixing the student loan debt crisis. Some of the proposed legislation discussed recently includes the Student Loan Forgiveness Act of 2012, which would use various measures to help distressed students repay, like improving the public works option to forgive debt, as well as enabling former students to refinance loans.

For those of you mired in student debt, be on the lookout for government legislation that can potentially help you. The most important thing to remember is that there are various options you have already before defaulting, including a deferred payment plan for low-income earners and loan consolidation. Defaulting on student loans almost always spells certain financial ruin.

Occupy DC Demonstrates Widespread Discontent

The Occupy DC protest is an indicator of growing discontent with corporate and political practices in the United States.  So far the protests in downtown D.C. have been peaceful and legally permitted per the Washington Post. A worry lawmakers, and police have probably already considered is how masses of people protesting provides catalyst for escalation. According to Defense Actions LLC, flash mobs can occur in environments quite similar to those of public protests. 

The Occupy DC website clearly defines their cause. They are protesting poverty, economic disparity and corruptive corporate influences on political decision making. Occupy DC, Occupy Wall Street and the growing Occupations nation wide  can be characterized as  a left-wing political movement and echo some of the sentiments made in Wisconsin several months ago. Specifically, after the Wisconsin State Government sought to legislate against Union collective bargaining rights and higher insurance premiums, unionized labor protested according to the New York Times. and other agencies back in February 2011. 

According to Internet Broadcasting Systems, Inc., the Occupy Together movement is reenergizing that sentiment expressed in Wisconsin. Posters on the Chanel 3000 website explain themselves. For example, according to 'Middle Class Moving Downward', "The hypocrisy is that many of the tea people have plenty yet feel entitled to their social security benefits when they could afford not to collect the benefits." The themes of both the Wisconsin protests and the Occupy Together movement share a doubt that legislative decision making is not effectively taking the middle class into account via pro-corporate votes and political gridlock.

There is an underlying theme to much of what is going on now. For the first time in many decades the U.S. economy is showing signs of wear and tear in the sense that its resilience to adversity might be weakening. This is apparent in economic indicators such as the uncharacteristically long period of high unemployment, high national debt and deficit spending, government cut backs and sluggish economic growth.  Perhaps we are not used to not having widespread wealth and are facing economic realities have living within means that have been normal for economies the world over. In such case, functional adaptation is key, a challenge we owe it to ourselves to rise above.