It’s the time of year to celebrate the accomplishments of those students who have finished their studies and are graduating.
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Now, it’s also time to start paying back all those student loans taken out to fund a college education.
In a study recently released by the Federal Reserve Bank of New York, total student debt outstanding as of the end of the first quarter of 2014 was reported to be $1.11 trillion. Student loans outstanding increased by $31 billion during the first quarter of 2014, an increase of about 2.8 percent.
As compared to the same period in 2013, student loan debt increased by $125 billion. This year over year increase in the total amount of student debt outstanding represents an addition of over 12 percent.
Assuming a generic 5 percent annual cost on the $1.11 trillion of outstanding student debt, the annual cost of servicing this debt would be $55.5 billion per year. Of course, these borrowings must be paid back too. So the overall cost of the debt, along with paying back the amount borrowed, will be even higher.
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