For you and many students like you, graduation from college does not come with a job. It can come with a pile of student loan debt. The average borrower in the college class of 2017 is expected to carry more than $38,000 in student loan debt, which may be accompanied by growing credit card debt, as well as an auto loan and maybe even a mortgage.
Student Loan Facts
The costs for a higher education are among the fastest-rising costs in American society today. Since 1980, tuition costs at public universities have risen from $2,119 to $9,410, a jump of 344%. Private college tuition is up from $9,500 in 1980 to $32,410 in 2017, a jump of 241%. By comparison, food and electricity costs have risen about 150% and gasoline prices have risen more than 200% over the same period of time.
A college education is an important requirement for entry into many of the highest earning professions and jobs. A college graduate can expect to make about $1.3 million more than high school graduates over the course of their working lives. How much you borrow, at what terms, and how you manage your student loan repayment can have a serious impact on your budget, your credit score and your ability to take out a car or mortgage loan in the future. If you or a family member are struggling with student loans, or have questions about your financial situation, speak with one of our skilled student loan specialists.
Student Loan Misconceptions
There are nearly as many misconceptions about student loan debt as there are ways to obtain and pay for it. Too often, college students rely on peers for advice on rules on responsibilities. In the process, a lot of half-truths or just plain misinformation is passed along.
Some of the more popular misconceptions regarding student loans include:
- It’s good debt. It is, if you get a diploma and job. The total amount you take as a loan should not exceed your first-year salary.
- Loans automatically renew until I graduate. Loans typically are for one school year. If you or your family’s financial situation changes, your loan awards could, too.
- Federal and private loans are the same. There are many differences, some of them enormous. Interest rates, loan modification and forgiveness programs are examples.
- I can always just declare bankruptcy. Not to solve student loan problems, you can’t. Only in extremely rare cases can federal and private loans be forgiven by bankruptcy.
Impact Of Student Loan Debt On Young People
The latest studies say that 70% of college graduates leave school with student loan debt that averaged $38,000 in 2017. That much debt at that age does not go away quickly and the impact of this is being felt in several areas, notably purchasing a home, starting a business, delaying marriage and contributing to retirement accounts.
A 2017 survey of Millennials found that 63% of them owed more than $10,000 in student loan debt and 42% of the women surveyed owed more than $30,000. Home ownership among those under-35 has dropped 21.2% since the housing collapse of 2009.
The burden of student debt is the key factor in young graduates not starting a business and the marriage rate for Millennials is plummeting. A 2016 study showed that 81% of women born in the 1990s had never been married and 38% of women born in the 1980s still haven’t married. Economists say that the Millennials will have to put away twice almost twice as much as their parents for retirement savings to be able to maintain a comfortable lifestyle when they quit working.
The good news is that there is a considerable payoff for those who got the diploma. More jobs require a degree so there should be more opportunities; the starting salary is higher for college graduates and they can expect to make about $1.3 million more over their lifetime than those who didn’t get a degree.