Due to increased US-government loan rates, students are opting to work full time. Increased student loan is leading to a steep use of credit cards and personal loans. Though a large percentage of the population in the US is indebted, reports suggest that the UK consumers remain the most indebted in the world. A PwC study reveals the amount of loans held by UK consumers is likely to increase by 3% next year, which translates to about 50,000 Pounds. This significant increase in debt levels is likely to have profound effects on future borrowing and consumption patterns of the society.
Loan type
In the USA, student loans serve as a form of financial aid that must be repaid, in contrast to other forms of financial aid such as scholarships and grants. Student loans tend to impact the US higher education pursuits. In several countries, specifically in Asia, student education is subsidized to make it affordable using the central exchequer. The US student loans come in 2 forms, Federal loans and Private loans, which include non-profit and institutional loans. Borrowers have 10 years to repay the total amount of the loan.
Tighter loan processing
The US student loan programs have been criticized for not amending their interest rates according to the risk factors and academic majors chosen by the students. It impacts educational success and loan repaying ability. In a recently quoted news article, the US consumer financial watchdog started providing security to borrowers. This agency will also travel to various sites to ensure that student loan servicers treat borrowers (students) fairly and comply with federal consumer laws. However, without financial aid from the Federal Government or lenders, numerous students at least in the US would struggle to acquire a degree.
Source:http://www.theguardian.com/money/2013/nov/25/student-borrowing-rise-unsecured-debt