How much people borrow to attend college can become just a small share of what they wind up owing.
Currently, fewer than a quarter of student loan borrowers are repaying their principal, or the amount they originally took out, according to recent remarks made by Education Secretary Betsy DeVos at a conference on financial aid.
That’s because their monthly payments are just going to the interest accumulating on their debt or they’re not paying anything right now.
In the meantime, their debt is likely growing.
For example, law school graduate Rick Tallini borrowed around $55,000 in the 1990s. He’s since struggled to find employment and pay the bills, and today his student loan balance has ballooned to well over $300,000.
Story like his are common, said Persis Yu, director of the Student Loan Borrower Assistance Project at the National Consumer Law Center. “Loans doubling, tripling, quadrupling; it really does happen all the time,” Yu said.
CNBC worked with student loan expert Mark Kantrowitz to explain some of the common reasons people see their balances climb.
Let’s say you started with $50,000 in federal, unsubsidized student loans, with a 5 percent interest rate.
Source : CNBC
