Biggest Source of Consumer Debt? Student Loans

When people think of consumer debt, they think of credit card debt. According to the Federal Reserve, however, student loan debt has now surpassed credit card debt among consumers.

Over $829 billion in student loan debt

Consumers now allegedly owe $829.785 billion in student loan debt, edging out credit card debt, which stands at $826.5 billion. According to one analyst, the accumulation of student loan debt is like cooking a lobster, ” . . .increase in total student debt occurs slowly but steadily, so by the time you notice that the water is boiling, you’re already cooked.”

Student loans are not free money

Many students, from undergraduates to law students, treat student loan money like it is not real money. It is, and it can cause enormous financial hardship down the line.

There are a couple of ways to avoid drowning in student loan debt. One, make sure the degree you are pursuing will allow you to pay back your loans. For example, a recent investigation found that for-profit schools were misleading potential applicants about jobs after graduation. Do your research and make sure you can actually get a job and it pays what you think it pays.

In addition, only take out what you need. Taking $3,000 spring break trips is a luxury, not a need. Going out to lunch everyday with classmates is a great time, but that also means you will be taking a bag lunch to your real job after graduation. As a lawyer once told me, “if you live like a lawyer during law school, you will be living like a student after law school.”