Inside the student debt crisis: 44 million are in $1.4 trillion in debt
RICHMOND, VA (WWBT) - It's spiraling out of control. Some 41 million Americans owe $1.4 trillion in federal student loan debt, which is nearly more than all of the credit card and car loan debt in the US.
About 8.1 million people are in default right now, which is more than the population in 38 states. They can't pay their student loans.
We spoke with three Virginians — carrying a combined $260,000 in student loan debt. That's the value of a home.
Adoph Brown has around $50,000 in debt and it's growing.
"It's a lot. It's like a cloud is over my head," said Brown, who graduated from Virginia State University last May.
"They're getting interviews. It's just very competitive to get the dream job they want," he said after watching friends looking for jobs and failing to find work.
He decided to put off his payments and go to grad school.
"It's scary that my dream job, I might not be able to take it due to the fact I can't make a certain amount money."
It's a fear for most young adults these days. One in every three borrowers is either delinquent or in default.
"We're making it too risky for people to try college because you have to borrow a loan," said Ben Miller.
Miller works at the Center for American Progress, and one of his priorities is the student debt burden. He doesn't believe it's going to sink the entire economy, but he says there are pockets of borrowers in serious trouble.
"We're forcing people to borrow for their education than in the past we would have given them sufficient grant aid or charged them a low enough price they wouldn't have had to," Miller said.
He believes states should be doing more to fund higher education, and colleges aren't being held accountable.
"Unquestionably, the people making the most money off the loans are the schools. It's their life blood. Without the student loan program, a lot of them couldn't really exist," said Miller.
The U.S. Department of Education tries to keep colleges in line, issuing what it calls 'cohort default rates' for every school. They track the number of people in a very short window who failed to make any payments within a year.
Schools with a default rate of 30 percent or higher are punished.
"Thirty percent is a pretty ridiculous mark to judge people on," said Miller. "To say that nearly one out of three borrowers can fail is unacceptable."
The Department of Education says the default rates are going down each year. Only 10 schools had a 30 percent rate, but Alan Collinge with studentloanjustice.org says it's not a meaningful measure.
"The default rates that the government publishes are a deceptive, misleading metric. They only count the defaults that happen two to three years out of school. That is not a true lifetime default rate," said Collinge.
Miller says the potential is huge for "'Manipulation' is the word I like to use," of the numbers because, if a school runs the clock long enough and keeps students out of default by delaying payments, they beat the metric.
"If they default in year four, the school doesn't care because it doesn't get measured on it," said Miller.
Even the White House believes those default rates don't show the real picture saying, "Repayment rates more accurately reflect borrowing behavior of students." Repayment rates measure the share of borrowers actually paying down their debt.
For instance, UVA has the best rate in Virginia -- 96 percent of students are in the process of paying back their loans.
Only two percent are in default.
Ninety-three percent of graduates from the University of Richmond are making payments, but there are some schools in Virginia where students are struggling after getting a degree.
At Virginia Union, only three out of every 10 graduates are making payments on their loans. Twenty-two percent are in default.
"It is really scary," said Brown. He is trying to be excited about his future, but his debt is a burden that is building.
"It just starts to accumulate more and more. And then sooner or later you just, it's like a life sentence," said Brown. "You know, you're stuck with it."
Even if you don't have student loans, the crisis reaches you, daily. This debt burden has a ripple effect throughout the economy.
Copyright 2016 WWBT NBC12. All rights reserved.