Suze Orman takes on the student loan crisis
Student loans are one of the most dangerous types of debt to have, says Suze Orman, who focuses this week's episode of "The Suze Orman Show" on ways to tackle the burden.
Recent reports show that Americans owe $1 trillion in student loan debt, that's about $200 million more than they owe in credit card debt. The story worsens when you factor in interest rates and ramifications for not paying on school debt.
"It's a real travesty what is going on in our country with student loans and our children," stressed Orman. "Students are paying more in interest on student loans than what they pay for a car or a mortgage, and those loans (auto and mortgages) can be discharged in bankruptcy," said Orman.
Unlike with most debts, the current federal law states that student loans cannot be dissolved or written off in a bankruptcy. This is a point of contention for Orman, who said "I couldn't agree with Sen. Elizabeth Warren, D-Mass., more," referring to Warren's vote against the recent Bipartisan Student Loan Certainty Act of 2013.
"Why are we charging our students interest on federal loans at all?" questioned Orman. "We are financing this bill on the backs of our future children and it's a travesty," she maintained.
In this week's episode of "The Suze Orman Show," Orman gives callers and guests strategies to pay down their student loan debt. She also explains the nuances of the new interest rates that became effective in August.
Federal student loan rates for 2013-2014*
Undergraduate loans 3.9 percent
Graduate student loans 5.4 percent
Plus loans (parents and students) 6.4 percent
*These rates are for new loans only and are fixed for the life of the loan. The rates for new borrowers will reset each July and are based on the 10-year Treasury note.
"One of the biggest problems that we are having in the U.S. is that our children are taking out these student loans to go to school and they are not educated about them. They have to be educated," said Orman.
This week's episode of "The Suze Orman Show" is in line with NBC's Education Nation initiative to engage the country in a conversation about the state of education in America.
See more of Suze Orman's student loan advice on "The Suze Orman Show" this Saturday, Oct. 5, on CNBC at 9 p.m. EDT.
—By CNBC's Sakina Spruell. Follow her on twitter @SakinaCNBC.