The Next Generation of Bad Credit

We all may have heard statistics about the college age citizens in the United States. USA Today says that about two thirds of people in their twenties have debts with rising late payments, and about half stop paying their creditors. Even hearing these numbers, does anyone really realize the severity of the problems? You may not think these numbers apply to you, but not only does it affect you, you may be at risk of becoming one of the statistics.

In the ignorance of our society, many people may assume that these stats are from the irresponsible, uneducated young community. In reality, this is not true at all. With the rising rates, students that started post-secondary school with cheap loans are now looking at unmanageable rates with very high balances. To top everything off, these student loans are taken with the expectation that once out of school, they will land a good job that would easy cover their payments. So what happens when the six-month grace period after graduation has quickly ran out and there is still no job? The results are debt collectors calling from eight in the morning to nine at night attacking the poor grad with threats of raising their rate and hurting their credit.

Even the most prepared students fall victim to this travesty. There are claims that young students are not properly taught about loans and debt. However, this clearly is not the case. Many students are left to feel that they have no other choice but to ignore the calls and try to earn enough money to get back on their feet. One problem with this is that it is hard to get a job when you must ignore about thirty calls a day. Not to mention the stress, and aggravation that is added in your life. Many of the brightest and hardest working students start their new life in the hole. Always expecting that they would be on top of non-college graduates. It is even harder to find a job since employers are allowed to hire based on credit history.

Sorry baby-boomers, your children want so much to become independent from you. Though, you may soon realize that you are put in the position to either help your child, financially, in every way you can, or watch the one you were so proud of, while they crossed that stage and received their diploma, fail and apply for the same serving job they had before college. Yes, this is true, the baby-boomers, that spent their lifetime building savings and preparing themselves for a retirement without proper social security, are now struggling to find ways to help support the children that they thought would be happily working in their own careers by now.

How else do these debts affect you? Just because you think you escaped this problem, either from firm finances, or by not having children, you are sadly wrong. This debt problem is hurting our entire economy. Debts are being defaulted; the future moneymakers are unable to become the consumers they would have been because their credit causes them to be unable to buy houses and other products. Entrepreneurs, with the passion and ambition to start small businesses, are unable to find the financial backing to become successful. This leads to fewer jobs that would have otherwise been produced. Leading to less commerce, resulting in a dead economy.

Who is to blame for this domino effect? The government and creditors are the primary cause. Of course, they would deny all possibilities that this could be their fault. The problem is not that they lent to much money out to irresponsible people, the problem is they loaned the money, then raise the minimum payments, the interest rates, and the late fees. Quickly leading to poor young unemployed bright minds to be unable to keep up. Suddenly, they are not paying off their debt but maintaining a relationship of a lifetime of payments that barely cover the minimum payment.

Debt collectors tend to sound rude when they call, acting as if it is your fault when you stop making payments. They could give you a break, and help you pay the debt off, but as a business, why lose a customer if they can get many people to continue to pay a small payment every month for the rest of their lives. This is one reason that the government is to blame as well. Though, the Fair Debt Act gives some rights to those in debts, there are many other enforcements that should be made. Also, the government is to blame for allowing interest rates to rise. Lastly, the government could avoid much of this debt in the first place by allocating more money to students and schools to keep tuition costs down. Unfortunately, we tend to give too much power to the rich in our government, and they have alternative motives to allowing creditors to build their empires.

Debt is a serious issue. Every college student can be warned about the creditors, but what choice do they have other than canceling their dreams and sticking with serving the rich for next to nothing tips. It would be advised to avoid debt as much as possible, and keep an eye and ear out from politicians that are willing to address the issues and start making serious changes.