The average debt load for the class of 2012, latest available, was $29,400, according to the "Institute for College Access & Success' Project on Student Debt." This is up 10.5% from the class of 2011. Now, that is a lot of debt for someone going into today's weak job market. A good site to visit to learn about student loan basics and interest rates on those loans is at American Student Assistance.
Let's go back and look at what the monthly payments would be for that average debt loan of $29,400 at 6% for 10 years. According to my calculations that monthly payment is $326. Now, what happens if that student defaults on that loan. If you default on a student loan there are statutory penalties, retroactive interest and fees that get added to the outstanding principal balance, since these are all federally-guaranteed, and those penalties and fees frequently run to 50% of the outstanding balance. If you default on $29,400 of student loan debt, you now owe $44,100, not $29,400. And, of course, you can't discharge any of it in bankruptcy.
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