Student-loan debt is ballooning across the country, with some economists calling it the next big challenge for the economy. The default rate on that debt is also growing, including in Georgia.
The average student-loan debt at Georgia’s four-year public and private universities grew to nearly $19,000 last year. Nationally, average debt tops $25,000.
The poor economy is driving people to take out more loans to go back to school, said Tim Fitzgibbon, vice president of debt management services at the National Council on Higher Education Loan Programs.
“And of course the second big driver is the fact that the cost of attendance at colleges and universities continues to go up two or three times as fast as the consumer price index,” Fitzgibbon said. “So not only are more people borrowing but those who are borrowing are having to borrow more.”
Senior citizens account for more than $36 billion in student loans collectively, according to a new Federal Reserve report. Fitzgibbon said they might have gone back to school late in life or they borrowed on behalf of their kids.
“You borrow those funds assuming that the child or grandchild then will be able to assume the payments when they get a job, but of course, the loan is in your name and we see a lot of folks struggle because of that, as well,” Fitzgibbon said.
Meanwhile, Georgia’s student-loan default rate jumped above 9 percent in 2009.
Officials at the Georgia Student Finance Commission said that’s partly because that figure includes three years of data on defaults when it previously just included two years. They say they’re starting to see default rates drop.
Student loans now account for more of Americans’ debt than auto loans or credit cards.