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High unemployment, student loan debt greet class of 2012

Graduates today face uncertain futures with record amounts of debt and an unstable job market. (Jeff Smith/Staff Photographer)

A perfect storm of unemployment, lack of opportunity and debt is creating the newest economic crisis ready to greet the class of 2012 as they graduate, and there are no easy fixes.

According to a study conducted for The Associated Press, 53.6 percent of young adults age 25 or younger with bachelor’s degrees find themselves without a job or underemployed, working low-wage jobs that only require a high school degree or less and do not take advantage of their skills.

Jobs graduates would normally take are no longer there as older, more experienced workers take those jobs in the wake of the recession.

On top of that, most studies show as much as 95 percent of job growth coming from the top and bottom of the wage scale, with middle-income jobs normally reserved for those with bachelor’s degrees disappearing because of new technological breakthroughs.

This compounds the problem of high student loan debt. Graduates out of work or struggling to get by find themselves increasingly unable to pay back their loans to the government or private institutions.

Student loan debt has grown rapidly over time. Total debt now has reached $870 billion, exceeding credit card debt and auto loans, according to the Federal Reserve Bank of New York.

According to a 2011 report by the Project on Student Debt, students in the class of 2010 owe an average of $25,250 in student loan debt. Central Michigan University graduates from that same year owe an average of $28,142, with 74 percent of students graduating with debt, well above the state averages.

Most student loan debt, according to a 2011 report by the College Board, is owed to the federal government. As federal aid has expanded, nonfederal loans (which usually have less favorable interest rates) comprised only 7 percent of education-related borrowing in 2010-11, down from roughly 25 percent just a few years earlier.

“The private student loan market has consolidated in recent years, with a number of smaller lenders leaving the business and some larger lenders selling their loans to others,” the College Board said in its report.

This presents an urgent issue for federal lawmakers on Capitol Hill to address. On July 1, interest rates on federally-subsidized loans are set to jump from 3.4 percent to 6.8 percent unless action is taken.

Leaders in both parties are looking to keep interest rates from going up. President Barack Obama and presumptive Republican presidential nominee Mitt Romney have both called on Congress to keep rates where they are.

“We cannot let America become a country where a shrinking number of people do really well, while a growing number of people struggle to get by,” Obama said on Saturday in his weekly address, speaking on student loan debt.

Other lawmakers are looking to go a step further.

Rep. Hansen Clarke, D-Mich., introduced the Student Loan Forgiveness Act of 2012 in March. The bill would forgive outstanding student loan debt for students who have made payments equal to 10 percent of their income for 10 years.

“This bill provides student loan borrowers with a second chance, those who have been struggling financially,” Clarke said in a news release. “By cutting this debt, this frees up their money to invest on their own. That will create new jobs throughout this country.”

The bill has yet to come up for a vote.

3 Comments

  1. Michmediaperson says:

    It’s the student’s fault!!!!  You students are so stupid.
    You were the biggest supporters of Barack Hussein Obama in 2008 and the Democrats that took back the Congress in 2006!

    When we had the Republicans running everything in 2005, unemployment was like 4-5 percent, students were getting good jobs.

    Then, the young people wanted Nancy Pelosi and Harry Reid to run the Congress.

    And, then they wanted the young community organizer from Reverend Wright’s church in Chicago, Barack Hussein Obama, a Democrat and Marxist socialist as president.

    “Hope and Change,”  yelled CMU students along with students across the country.

    How are you liking “Hope and Change” now students.  Big student loans, no jobs or minimum wage jobs.  $4 gas. And, historic trillions of dollars of debt that will follow you young people forever.   And, now social security will run out in 2033.  So, you’ll be subsidizing Limbaugh fans like me but you won’t have any social security when you retire in 2050-2060, thanks to Obama and the Democrats.

    Obama is getting rich and spends months and months on vacation, thanks to you….along with his golddigger wife, Moochelle.  All thanks to you!

    If I were you students, I’d fire Obama and Debbie Stabenow.

    Enjoy your job at McDonalds or no job at all.  Start paying your debt!   You can thank Barack Hussein Obama for your dismal job prospects!

    Isn’t Hope and Change wonderful!

    • What a vindictive fool you are. Yes, let’s belittle other Americans as they struggle to make a life for themselves. That’s very helpful. 

      And if you honestly think that one president could magically raise the cost of college, lower the number of jobs available by the tens of thousands, and tank the WORLD ECONOMY since his inauguration you’re an even worse fool. 

      It’s a global downturn. Stop being a prat and try to help your fellows or shut up. 

      • Michmediaperson says:

        Hey Lokilp:  Obama said “Hope and Change.”  Free college scholarships, jobs for everyone.  Only fools believed Obama.   Most of those fools were young people.
        I remember reading in the Saginaw or Flint paper when Obama said free scholarships for all.  This guy had no credentials to be president.  He was a community organizer in Chicago.  Never made a payroll.  George Ross is far more qualified to be president than Obama.  At least, George has made a payroll for years and ran organizations with a lot of people in it.  Obama was unqualified but you young people were fools!

        Back in 2006, when we had a Republican in the White House, running the US Senate and the House—-unemployment was at a low 4.6 percent, business booming.  Then, the fools in this country voted Democrats and put Nancy Pelosi, a feminist hack, running the House.  Unemployment started to rise.  Then, it went through the roof since Obama got elected.  Businesses were scared because of Obamacare, higher taxes, more regulation and so on.

        Lokilp, businesses aren’t hiring because of fears of Obama raising taxes on the wealthy, continuing more regulation, higher healthcare costs because of Obamacare and so on.   That’s your fault and the fault of all the fools who continue to vote Democrat.

        And now, Obama is giving amnesty to 5 million illegals who will continue to steal jobs from recent CMU students and others.  We’ve got to spend money educating the illegals, giving them scholarships, free healthcare while legal Americans have to foot the bill and go further into debt.

        How are you liking Obama and Stabenow’s “Hope and Change.”

        I’m voting Romney.   A professional who will turn this country around.

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