by Charing Ball

Over $36 thousand.  No, that’s not my income, in fact that’s more than I will make this year. $36 thousand is how much I owe in student loans.

Ten years and three months removed my graduating from Virginia Union University, I am nowhere closer to paying down the debt as loans composed most of my financial aid. Like many Americans, I have exhausted all deferments, forbearances and modifications options and am caught between dogging phone calls from my loan provider and digging between seat cushions, just to scrape together enough to remain current.

As a first generation college grad, I once looked at my degree as a way to escape poverty by opening doors to better career options and more money.  However, when I add up how much I’ve been paying in rent, utilities, car insurance, health insurance, food and student loans, and subtract that from my public service salary plus the money I earned through writing and other side ventures, my current finance fails to make dollars and sense.

According to a recent study by the College Board, I am in plenty of good – or unlucky – company as almost one-out-of-five graduates with bachelor degrees will not be able to make payments on the average undergraduate loan debt, which now stands at a whopping $30,500 (pre-interest). If that’s not disheartening enough, consider that for the first time ever, student loan debt now outranks credit card debt.

Let me say that again; Americans now have accrued more debt by pursuing higher education than by using their credit cards. To be exact – $605.6 billion in federal student loans outstanding and $167.8 billion in outstanding private student loans. The news is even more troubling for both the African American and Latino communities, who borrow disaportionately to pay for private nonprofit or for-profit college than a public four-year college.

How did this happen?

Well, there are a number of variables that have contributed to this perfect storm of debt: According to the College Board study, borrowing has doubled over the past decade, to roughly $85 billion in new student loans in the 2007–08 academic year, mainly to keep up with the rising college cost, which too has ballooned at twice the rate of inflation.

When students have exhausted all other forms of federal and scholarship aid including Pell Grants and scholarship, they often resort to federally-back direct loans as well as private student lending, which made up for about 25 percent of all student loans and often come with higher interest rates.

The rule of thumb has always been that graduates with bachelor degrees makes on average a million dollars more than those with just a diploma.  However, the million you’re suppose to make is off-set by the reality of a, on average, $46,700 four-year cost of tuition (including fees, books, room and board) at a public school and $99,900 at a private institution (you know, your Harvards, Yales and most HBCUs).  And while the median income for a worker, who is fortunate enough to get a job in this economy, with a bachelor’s degree is around $46k, you have to remember that average college grads don’t pull even that with the average high school grads income level until age 33.

It’s no wonder that the default rate climbed to 7.2 percent in 2009 (that rate is almost three times as much at for-profit universities). In an effort to give kids a chance in the workforce, especially when many jobs are now requiring at least a two-year degree, families are borrowing more than they can afford to pay back their loans and are being penalized severely for it.

Earlier this year, President Obama signed into law several loan reform programs, which would add more money to Pell Grants, legislate the caps of future graduates annual payment at 10 percent of their income and eliminate fees paid to private banks to act as intermediaries in providing loans. Currently, Congress is weighing legislation to allow borrowers to wipe out private student loans in bankruptcy, which currently can only be discharged through the impossible task of proving “undue hardship.”

But this might not be enough to help the thousands of graduates such as myself, who are trying to keep ahead of the debt. Is student loan debt the next financial bubble to burst?  All indicators are suggesting that it’s almost certain that student loan debt will go the way of the housing market.

And while there is no easy fix for the student loan crisis in this current structure, a combination of across the board caps in college costs plus an expansive student loan forgiveness program for those of us, whom are already out in the workforce, could go along way from keeping this from happening.

If we can bail out the banks, than we can forgive graduates of their student loan debts. And while you can foreclose on a house, repo a car, you can’t take back an education.