Each student owes more than half a million dollars – Student LoanOn January 7, 2020 by Marlene Niemeyer
Student loans in the US pose a risk. Every student had to borrow more than 560,000 crowns for training and study.
In the United States, students have huge debts. On average, each student owes about USD 560,000. This is mainly due to how education in the United States is funded.
While in the Czech Republic the vast majority of students pay only ancillary expenses (school supplies, textbooks, accommodation or commuting), in the United States most trainees are selected, ranging from thousands to tens of thousands of dollars.
Student Loans in the US – Another Hidden Threat Like Mortgages?
Given the current situation around student loans in the US, financial experts are beginning to worry about not having a similar hidden threat to the mortgage market. It collapsed a few years ago and due to the unrealistic valuation of a large number of bad mortgage loans, a global economic crisis and a subsequent recession occurred. Several major financial institutions were the victims of this crisis, and the others recorded very high losses.
Currently, Americans owe more for student loans than their credit card debt or car purchase loans. Especially recently, the share of “bad” (non-performing) loans has also increased. This is also related to the aforementioned crisis. It has been a problem for graduates to find a job for a long time. Therefore, they have no possibility to start repaying their financial obligations from their studies. And that only worsens the situation.
Currently, there is a risk that US banks will begin to change the conditions for student loans. This would lead to their drastic price increase.
Student loans with us
While in the USA (or in some other Western countries) it is common to borrow for studies, it is not very widespread practice in our country. Given that the introduction of tuition fees is constantly postponed at Czech universities, most students do not even need to raise more money for their studies.
Some banks offer loans for students – such as the student loan Gaudeamus from Student bank or a loan for students from UnliCredit banks. However, these are mainly non-purpose loans, from which students rather finance expenses related to the stay at school.
There is little who borrows to pay for training
Moreover, these student loans are not used massively. The prerequisite for obtaining them is the liability of one of the parents or some other form, otherwise the student must prove the income as a regular applicant.
Banks currently do not lend money on the basis of student status or as a special-purpose loan for the payment of a trained one.