Student loan interest rates have doubled from 3.4 percent since no action was taken by the U.S. government to stop it, but what does that mean for those repaying their debt today?
According to USA Today, young adults have made paying their loans top priority. In most cases, the amount of the graduate's debt exceeds their annual salary. Average student loan debt has risen to $27,500 from a little more than $15,000 in 1993.
"Rising tuition costs and an anemic job market are feeding this vicious cycle, as a generation with more student loan debt than any other is struggling to find its economic footing," USA Today reported.
Jacob Childerson, a 24-year-old college graduate one year out of college, told USA Today "he feels like he can't grow up" with his salary of $28,000. He and his wife Jennifer owe a combined $92,000 in student loan debt, making it difficult to afford a place of their own. The couple lives with his wife's parents, carpooling to work because they can't afford a second car loan, which means having to pass up better job opportunities because it may be out of the way for the other.
"We can't start a family, we can't buy a house, we can't sort of settle down, I guess," Childerson said. "We can't have that quintessential American dream." Childerson has not been able to find a job in his field, despite graduating with a degree in international business and speaking fluent Spanish.
Student loan debt can inhibit someone from becoming a homeowner or starting a family because they simply cannot afford the costs. Due to the inaction of lawmakers, new federal student loan borrowers will see the interest rates double because a 2007 law that cut the interest rates expired July 1.
"You could have generations that never get in the economic mainstream," Ted Beck, president and CEO of the National Endowment for Financial Education told USA Today. "If you never get into the whole U.S. economic system because you've been held back by too much early debt ... we could have a lot of people who just never really come anywhere near their potential."
Another struggle this generation faces is being unemployed or underemployed. Millions of college students are graduating into a steadily improving economy, but according to reports job creation can't keep up with the employment demand.
"Class of 2012 graduates faced an unemployment rate of 13.3 percent, though not seasonally adjusted, according to data from the Bureau of Labor Statistics, though the rate drops significantly the longer students are out of school," USA Today reported. "The national rate, which is seasonally adjusted, is 7.6 percent."
To read more about how student loans are effecting graduates, click here.
