Student loan debt will probably exceed $1 trillion this year as Congress threatens to slash federal aid, the New York Times reports.
Earlier this year, the House proposed numerous cuts to the Pell Grant Program, which has not been able to keep up with the staggering number of students who qualify for federal aid.
Financial aid expert Mark Kantrowitz wrote about the potential cuts for the Huffington Post:
...The proposed cut in the maximum Pell Grant will be the largest cut in student aid funding in the history of the Pell Grant program.
This proposal will cause more than a million students to lose eligibility for the Pell Grant. Every $100 change in the maximum Pell Grant currently corresponds to about 200,000 recipients. The proposed cut in the maximum Pell Grant would mean that 1.7 million low-income students would no longer qualify for the Pell Grant, almost a fifth of current recipients. The remaining recipients would have their Pell Grants cut severely.
President Obama has proposed cutting other financial aid programs to keep the maximum Pell Grant award -- $5,500 -- intact.
Last year, the Project on Student Debt reported that the average student debt was $24,000, the highest figure ever recorded and a 6 percent increase from 2009.
Student loan debt also exceeded credit card debt last year as the largest source of debt for Americans.
As the Times reports, there is some ongoing disagreement over whether student loan debt is "bad" or "good" debt:
In some circles, student debt is known as the anti-dowry. As the transition from adolescence to adulthood is being delayed, with young people taking longer to marry, buy a home and have children, large student loans can slow the process further.
Susan Dynarski, a professor of education and public policy at the University of Michigan, said student debt could generally be seen as a sensible investment in a lifetime of higher earnings. "When you think about what's good debt and what's bad debt, student loans fall into the realm of good debt, like mortgages," Professor Dynarski said. "It's an investment that pays off over the whole life cycle."
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