Proposed Federal Law Will ‘Garnish Wages’ from Paychecks of Student Loan Holders

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Proposed Federal Law Will ‘Garnish Wages’ from Paychecks of Student Loan Holders

Consumer advocacy groups are calling the student loan paycheck deductions “mandatory wage garnishment” and are throwing up red flags.

 

As government subsides continue to flow into colleges across the country, the price of tuition continues to skyrocket, with some rates shooting up nearly 400% since 2000. Over the same period, as the price of college went up, median income in the US went down. This created the perfect storm for what we are currently witnessing right now—a black hole of student loan debt.

 

Basic economics teaches us that when the government subsidizes an industry, you get more of it. In fact, a study by the New York Federal Reserve found a direct correlation with an increase in government subsidies and and an increase in college tuition.

 

As more kids are told they need college for jobs—instead of going to trade school—they take advantage of these subsidized programs, which aren’t enough. So, they have to take out more loans to pay for school.

 

Because of this trend, Americans now owe over $1.56 trillion in student loan debt, spread out among roughly 45 million borrowers. That’s about $521 billion more than the total U.S. credit card debt.

 

Debt is not necessarily a bad thing as borrowing money to further your chances of making more money in the future can be a good plan—sometimes.

 

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