Taking out a loan for school seems simple.  Everyone seems to have the same logic.  Take out the loan, go to school, graduate and get a good job and pay the loan back.  Seems simple enough, however, this plan has not been panning out for many recent college graduates.

There is a new generation of young adults moving into adulthood with a heavy and growing debt following them.  Research is developing on this generation that suggests tough loan payments are affecting major life decisions by recent college graduates which includes them being forced to put off traditional milestones like buying their first home to marriage to having children.  Matthew Greenwald & Associates Inc. conducted a survey in 2006 of 1,508 graduates under the age of 35.  39% of the graduates said it would take them more than 10 years to pay off their household’s education related debt.  44% blamed having to delay a purchase of a house on their student loans and 28% blamed their student loans for having to put off having children.

Robert Shireman, deputy undersecretary of the Education Department, blames the economy for the increase in student borrowing.  He states, “The sharp growth is definitely above expectations.  But we’re also in an economic situation that nobody predicted.  The eye-opening increase in borrowing is largely due to the dire economic environment, which is causing more people to seek federal loans.” The U.S. Education Department reported that federal student loan disbursements (total amount borrowed by students and received by schools) grew 25% in the past year to $75.1 billion.  In addition, the Federal Stafford Loan (the most popular federal aid program) increased their total borrowing limit from $23,000 to $31,000.

So, is there anything being done to try to alleviate this problem?  Well, the Congress made an attempt to pass a bill that ended up dying out.  The bill, drafted by Rep. Howard P. “Buck” McKeon of California, would have penalized colleges for raising tuition too much by taking away federal subsidies.  However, since there is no current legislation to date, students will have to continue to borrow to keep up with the rising tuitions.