Six years after the Wall Street meltdown, the economy and financial indices of this nation remain distressed and distressing.
One of the worst pieces of our poor financial health is the burden of debt on current, recent, and older college students and graduates. Approximately 40 million Americans have student loan debt that now totals about $1.2 trillion. That number exceeds the total amount of credit card debt in the nation and is second only to mortgage debt.
The average four-year college graduate has about $29,000 in student loans. The burden varies widely, of course. Some grads owe $5,000 or $10,000, while others owe $50,000 or $75,000 or more. Many are in default.
What is really troubling is that this problem has been growing for a long time, continues to worsen and appears likely to become even more severe yet. Student loan debt is the only form of debt that has continued to grow during the current economic slowdown.
Two main factors are at work. First, the cost of college can be enormous. Second, graduates are not finding employment — to then repay loans — or they are finding “underemployment.”
Over the past 30 years, the total cost of a college education — tuition, fees, room and board — has increased at a rate more than double the rate of inflation. Today, attendance (with dorm) at a modestly priced state school can typically cost $18,000 a year, while a private university can easily cost $65,000 a year.
Complicating matters, the student debt at different colleges varies tremendously and doesn’t simply get bigger at more expensive schools. Many private universities are wealthy and can give generous financial aid to their students. Many public colleges, depending upon what state they are located in, are well subsidized by state tax revenues and, thus, can restrain tuition levels.
So, although national statistical totals are bleak, it takes a state-by-state and college-by-college assessment to determine where the biggest problems are.