When it comes to student loan payments, you’ll need to work harder than ever to avoid bankruptcy.
That’s according to a new report from Credit Suisse that predicts the number of borrowers who’ll owe more on their student loans will continue to grow.
In a report titled “How Debt-Driven Borrowers Are Driving Up Their Borrowing Debt,” the investment bank says that the percentage of Americans who are making at least $50,000 per year on student loans is on track to double by 2021.
This means that if you’re making $50K, you’re already making more than half of what you were in 2021.
The report says that for those making $75,000 or more, the number is on the rise.
It predicts that by 2021, half of all borrowers will owe more than $100,000.
It also predicts that the number will more than double by 2024 for those earning $150,000 to $200,000 and by 2025 for those over $250,000, with a $2.5 trillion impact in the United States.
This trend is being driven by the financial crisis, and the increasing burden of student debt, according to Credit Suse.
It predicts that debt-driven borrowers are also likely to pay more for their education, with an average monthly payment of $1,500 for those with the largest balances.
The report estimates that by 2031, the percentage rate of debt on Americans’ loans will have surpassed 60% for the first time.
As the number increases, so does the burden on borrowers.
In 2021, a typical student with $100K in debt will have to pay about $11,000 in additional fees and other costs to get the same amount of education as a student with a similar income, Credit Suce reported.
Credit Suse also says that while the overall amount of debt in the U.S. is expected to be $1.5trillion by 2061, the average borrower will pay about 15% of their income on student loan interest and fees, compared to about 2% for those who earn less than $25,000 a year.
“The amount of student loan student loan servicing is growing by leaps and bounds, with over 70% of borrowers servicing more than 10% of student loans,” Credit Suise said.
“This trend of increased student loan costs will continue for decades to come, and it’s one that should be considered when assessing your financial situation.”
What can you do to avoid debt?
Credit Suase also predicts debt will grow even faster for borrowers in their 30s, 40s and 50s, with some of the fastest increases for borrowers between the ages of 20 and 35.
While this is an important trend to watch, it’s a warning that it could be a short-term concern, Credit Seq said.
In 2021, an estimated 1.5 million people will be living with student loan debts, up from about 1 million in 2021, and there are more than 2.3 million people in default on their loans.
Credit Suisse estimates that the total amount of unpaid student loan loans in the country is $1trillion, up more than 50% from the $1 trillion mark in 2021 and more than 40% from $1 billion in 2020.
“As the economy continues to grow, debt is expected continue to increase and be a significant burden on the American economy for the foreseeable future,” Credit Seqs co-founder and CEO James C. Kogan said in a statement.
“The impact on our economy is clear and we expect this trend to continue.”
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