A new wave of college graduates are falling behind on their student loans. The latest numbers from the U.S. Department of Education show that loan default rates are rising for the first time in a decade, with serious repercussions for those who fail to pay—including skyrocketing interest rates, garnished wages and a damaged credit score.
These facts weigh heavily on a generation of new students and their parents. During a recession, is a college degree worth taking on debt? Here are three different perspectives to think about that could save you money in the long run.
Financial Expert Jean Chatzky: Good Debt vs. Bad Debt
Financial expert Jean Chatzky says there is good debt and bad debt, and educational debt is the good kind. "Good debt is the debt that gets you someplace," she says. "It's the home that you live in as long as you can afford it, it's the car that gets you back and forth to work—not your second or third car—and it's your education."
It's even more important to have an education during a recession, Chatzky says. "If you have that college degree, you're four times less likely to be unemployed," she says.