Student Loan Debt Approaches One Trillion Dollars
New reports from Sallie Mae, the Federal Reserve, and banks involved in private loans estimate that students will have $1 trillion in student loan debt by 2015. This is a staggering number whose weight on the economy is better understood when it is compared to outstanding credit card debt. The hard truth is that student loan debt exceeds credit card debt.
The College Board estimate of new student loan debt from 2001 to 2010.
Part of the reason for that surprising comparison is the likely amount of debt that a student can accumulate. The US Department of Education reported that average debt held by student borrowers at the end of graduation has exceeded $25,000 for the first time. Not many people manage to carry more than $20,000 in credit card debt.
The life cycle proposition for a person graduating with this much debt is daunting and it extends across many common events in an adult life. Certainly having this much debt will crimp any hopes of qualifying for a mortgage loan. More college-educated people, a group that constitutes a sizable portion of prospective home buyers, are going to rent for a longer period of time and buy less house when they finally do make it to home ownership.
How are people doing with all of that debt? Not well. Almost one in ten borrowers defaults within the first year after they leave school. Simple statistics would say that college graduates are impervious to unemployment. Yet those numbers ignore people leaving the workforce. People with part-time jobs count as unemployed on common BLS measures. Moreover, how many baristas and dog walkers have college degrees?
No one made the folks over at the local Occupy Wall Street scene borrow all that money. Perhaps some of them should wear a little less patchouli. Nonetheless, they have re-ignited the issue of student debt even as though no air has cleared from the crisis of mortgage debt.
Today, the University of North Carolina-Chapel Hill floated a proposal to increase in-state tuition by forty percent. My friend with the doctorate is teaching one adjunct class per semester. Last time I went to Starbuck’s, my barista had a college degree. It was the same story with the cashier at Kinko’s – and she went so far as to say that she should never attended the University of Toledo.
Caitlin
November 6, 2011
As a recent college graduate, and a current bartender, I can totally relate to this post. I was one of the lucky ones whose parent’s were a big help, and I left undergrad without student debt. However, these days a bachelors degree is almost as useless in most cases. The funds have run out, and grad school seems to be the best choice for the immediate future. The thought of such daunting debt is most definitely scary though. I feel like students today either have to choose between no education or extreme debt. What is the best choice? Further schooling does not necessarily garuntee you a high sallary. It almost seems to be a lose-lose situation. So what should be done?
Garrett
November 9, 2011
I too do not have a student loan. Many of my co-workers in the health care industry do though. It seems to me that this particular loan is the last to pay off on their priority list. The small interest percentage is a lulling complacency. Adds up over time, but is easily rationalized away.