MINNEAPOLIS -- College is a dream for many students. But life after school is turning into a real nightmare for many. Daniel Schwartz knows all about student loans. He finished school in 2010 with much more than a master's degree in urban planning.
"I accrued about $55,000 in federal and then in private there was about $12,000 and in parent-private there was about $8,000 in loans," he said.
Schwartz is a part of what experts are calling the "student loan bubble" and it's close to bursting. When the federal loan program started more than four decades ago, it was supposed to help students. Now, it's hurting them and is expected to get worse. Student loan debt has gone over the $1 trillion mark, surpassing credit card and auto loan debt.
"Student loan debt looks like it's poised to grow and grow and grow," Darryl Dahlheimer, program director of financial counseling at Lutheran Social Service, said.
Dahlheimer said one of the big problems is increasing tuition.
"You get these soaring higher education costs and students being naturally broke look to loans as one way to fill in the gaps," he said.
When students graduate, many remain broke because they're unable to find jobs or one that pays enough to keep up with bills. Schwartz found a job after graduation but fears at his current salary it will take him a long time to repay his loans.
"I can foresee myself being, you know, 60+ before this balances its way down to zero," Schwartz said.
The 26-year-old was able to work out an income-base repayment plan for his federal loan and his mother has paid off one of his other loans.
Others aren't as fortunate. Last year the federal student loan default rate rose to 15 percent from 12 percent the previous year, according to the US Department of Education.
Dahlheimer said students aren't the only ones on the hook for federally backed loan; it's tax payers too. He said another federal bailout could be on the way if the rate of loans keeps growing with no control.
"Student loans are a tool. But use the tool for yourself. Don't use the tool like a hammer like you're bonking your head with," Dahlheimer said. "Stay in control of your debt. Get help if you have student loan debt. So you know your options and live like a student."
Looking back, Schwartz said he would finance school differently if he knew what he knows now.
"Student loans stay with you forever. They don't go away," he said.
The average student loan debt has jumped 25 percent in the last 10 years to $25,000.
Free financial counseling is available through Lutheran Social Service's website.
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