Student loans - the next "mortgage meltdown" crisis?

CHARLOTTE, NC (WBTV) - An entire generation of today's college graduates are facing financial ruin, unable to climb out of a debt cycle started by high-interest student loans.

Their job perspectives are grim, and, in many cases, their interest rates are outrageous.

Could this be the country's next "mortgage meltdown?"

A college degree used to be one of the keys to success - access to the American Dream.

Then again, so did homeownership.

But, as a nation, we have $700 billion in student loan debt, and one in five people can't make their monthly payments.

It's a problem that could devastate the workforce, because there's a large class of educated workers out there with massive dents in their credit, something potential employers are monitoring more closely.

That truth almost ruined Bob Dickie.

Dickie, 54, once had the typical American mindset - he thought getting a college degree would be like getting a new lease on life, and that paying for it was easy as filling out a student loan application.

"The school promises the world to the student," he says. "You're going to make a great living, you're going to launch your career. All the stuff you see on TV."

So he went...and graduated in a recession.

Dickie managed to get a job, but he wasn't making anywhere near what he needed.

"The pay was $10 an hour," Dickie says. "So paying rent and commuting 50 miles one way, there was just absolutely nothing left."

But skipping student loan payments crumbled his credit.

"I mean, I had all the luxuries of upper middle class. Brand new cars, health care membership, home, I was used to the good life," he says. "After this experience, it just kind of tanked out."

Dickie's partner, Angela Money, tried to negotiate with his lender.

"They were very threatening to us," she says.

And Money says they wouldn't help by lowering payments. In fact, they hiked the interest rate. Dickie's debt just kept getting bigger.

Eventually, he managed to pay the loan off, but it still haunts him.

"Now, our battle is, we can't get it off his credit report," Money says.

"It can become a downward spiral," Dickie adds. "Because now employers are using your credit rating to see if you are a good candidate for employment."

"It's a Catch-22," adds Money. "So how can people do better and progress when things like this are happening?"

It's exactly the kind of question the country asked during the mortgage meltdown.

http://www.wbtv.com/global/story.asp?s=12909902