As college costs continue to increase — by 2.8 percent for in-state students and 3.5 percent for out-of-state students for the 2012-2013 academic year at Michigan — and post-grad job prospects worsen, more college graduates are defaulting on their student loans. Facing an uncompromising job market, fewer college graduates are able to pay their loans back on time and are facing serious legal repercussions. In 2011, the default rate for the first three years after graduation was 13.4 percent — an alarming 14-year high. All levels of government should explore policy to extend the deadline for student loan payments so graduates have time to secure a job before being hit with their tuition bill.

According to a Bloomberg news article, more than 10 percent of federal student loan borrowers default on loan payments that amount to $1 trillion nationwide. Meanwhile, graduate student unemployment has reached a record high, with an 8.8 percent unemployment rate in 2011 with a successful job search timeframe of about six months. And student debt continues to increase with the average hovering around $27,000. This means that only one year after graduation, the interest accrued is almost $2,000.

With these obstacles, many students have had no choice but to default on their loans, as they simply do not have the money to settle debts so soon after graduation. Luckily, the 2012-2013 academic year student loans has seen leveled interest rates at 3.4 percent for subsidized and 6.8 percent for unsubsidized and graduate loans.

Still, studies have shown the seriousness of graduate student unemployment and its effect on loan defaults. In a 2011 college graduate survey, only 287 of 503 college graduates surveyed reported full-time employment immediately after graduation. One-third of students moved back home with their parents and approximately one-fifth of these graduates are now financially dependent on their parents. The combination of a poor job market and high student loan costs make it increasingly difficult for graduates to live on their own. Many are drowned in debt before they can even earn their first post-grad paycheck.

Diversity of college majors is also shrinking as a result of the struggling job market. The same study showed that nearly one-half of employed graduates work at jobs that do not require a four-year college degree. A college education should have more leverage in the job market, but at the same time should be flexible enough to allow students to pursue their interests. With the threat of student debt looming overhead, many students are pressured into majors that traditionally garner high paying jobs. Without a five or six-figure debt looming after graduation, we wouldn’t want to lose less profitable but nonetheless important concentrations.

Government needs to extend the student loan payback timeframe. A longer student loan grace period will give graduates more time to organize their finances and maintain their credit scores. This will decrease default rates and create more stability for graduates and lenders alike. In today’s floundering economy, finding a job is a time consuming rarity. Extending student loan deadlines allows graduates to look forward to their careers, not backward in regret at their student debt.

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