Student loan debt is growing by $3,000 per second, being the largest form of debt in the USA outside of mortgages.
According to a Federal Reserve report, updated in May 2016, American students owe over $1.3 Trillion in Student Loan Debt. The average debt for 2016 graduates now averages $37,172, which is up to 6% over 2015 data.
Recent research conducted by the Federal Reserve also shows that over half of outstanding student loans are presently in deferral, delinquency, or default. Americans are more burdened by student loan debt than ever before.
While most studies focus on the exacerbating growth in outstanding debt, delinquency rates, and wealth inequality, few initiatives highlight the importance of financial literacy and its impact on the graduates’ development as future employees.
On the other hand, the rapidly growing problem of student debt has attracted many and diverse reactions, ranging from rallies and protests to constructive initiatives from well-regarded business people.
Most importantly, in April 2016, Rep Matt Salmon from Arizona introduced a bill into the US House of Representatives. The H.R.5016 – Financial Literacy for Financial Aid Act would require student borrowers applying for a loan to be provided with financial education. Joining forces with Rep. Salmon to develop and advocate for this bill is Sharon Lechter CPA CGMA, financial literacy expert and recognized as the #1 Financial Literacy Educator for 2015 by the National Literacy Educators Council.
Needless to say, before borrowing tens of thousands of dollars, potential students need to be educated in the long-term impact of such financial decisions. Through this online counseling tool, graduates would receive instruction in various areas of financial literacy such as the purpose and uses of taxes, the cost of borrowing, the importance of financial planning, and the understanding of their rights and responsibilities as credit consumers.
“Education is the most important tool our children have to ensure their financial wellbeing. We must educate our children on the financial responsibilities of student loans”, says Sharon Letcher, CEO at Pay Your Gamily First, noted entrepreneur, author, and business advisor. In her public service announcement, she lays stress on the fact that the vast majority of our students have little to no financial education in high school or college.
If the government allows potential students to borrow substantial sums to find and maintain employment, it is essential to help them craft financial goals. American young adults are asked to take on financial literacy as they are facing a debt crisis exceeding that of any previous generation.
Your immediate help has never been more important. You are kindly asked to call your representative today or email his or her office in support of the H.R. 5016 – Financial Literacy for Financial Aid Act. Let him or her know that the next generation needs financial education before getting into debt. For further assistance, please visit www.house.gov/representatives/find/.
Ultimately, share this with your friends and associates and ask them to do the same. Your voice can make a difference!
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