Student loan debt is an ongoing crisis in America, with outstanding student debt exceeding 1.3 trillion dollars. This is an increase of two and a half times what it was just ten years ago.
This increase is due to a variety of factors. Foremost among these factors is the steadily increasing cost of higher education, accompanied by a larger than ever percentage of high school graduates attending college.
Here are some key issues facing students today and look at some of the key statistics surrounding student debt in America.Compared with people who do not have student debt, those with student loans are less optimistic about the value of the college degrees they hold.
Of those surveyed by Pew Research, half (51%) of those survey participants between the ages of 25 and 29 with at least one degree and some outstanding loan debt state that the value of the college education they earned is worth the price they paid for it. To put this statistic in perspective, consider the corresponding fact that about 70% of survey participants who did not hold student loan debt but did hold a degree believed their education to have been worth the financial cost.
Is it Worth Taking Out a Loan?
Young people who have graduated from college with student loan debt usually come from a higher income family than those who did not earn a bachelor’s degree. For many students, using student loans is the only realistic way to make a seemingly impossible college education dream into a reality. The significant trade-offs of student loans can sometimes be worthwhile if the degree earned translates directly to a higher income earning potential later on in life.
Overall, people who are between 25 and 29 years and hold at least a bachelor’s degree are more likely to have a higher total family income. This is the value of the graduate’s income in addition to those incomes of a partner or spouse who lives with them in the same home. Approximately two thirds of those with student loan debt live in households with incomes of greater than $50,000, whereas only 40% of those without a bachelor’s degree earn that amount at a household level.
However, graduates who carry student loan debt are still less likely to obtain a household income of that level than those who graduate debt free. The students who graduate debt free are 77% likely to obtain a household income of greater than $50,000 per year. Another interesting fact is that college graduates are more likely to get married than people who did not graduate from college, and statistically, those who are married earn more than those who are not married.
Nearly one third of people without a bachelor’s degree earn less than $25,000 at the household level, whereas less than a tenth (8%) of those with a bachelor’s degree earn under that amount. This key statistic goes to show that the value of earning a bachelor’s degree can be quite dramatic when it comes to household income later on in life.
Getting a Degree Means Two Jobs?
College graduates who hold student loans are more likely to hold a second job or to struggle financially than those without student loan debt. Approximately one fifth, or 20% of people who have graduated with a bachelor’s degree and hold student loan debt report having to hold a second job to make ends meet or to repay their student loans. Those graduates who do not hold any outstanding student loan debt are only 11% likely to hold that second job. This statistic also applies for young adults overall, regardless of college education. This goes to show that holding student loan debt means you are more likely to hold a second job than any other demographic group.
A Degree Does Not Guarantee Financial Security
Students who graduate with student loan debt also hold a more pessimistic outlook as it pertains to their personal financial situation when compared to graduates who do not currently hold student loan debt. Of the graduates with outstanding debt, only a bit more than a quarter (27$) report that they are living comfortably, while nearly half (45%) of those who do not have outstanding debt but are of the same age group demographic report living comfortably.
Better School, More Loans
Outstanding student loan debt varies dramatically, particularly according to degree obtained. In a survey conducted in 2016 by Pew Research, the average graduate with student loan debt had an outstanding balance of $17,000. However, this median number doesn’t tell the whole story. About one quarter of those surveyed reported owing a total of more than $43,000, while another quarter reported outstanding balances of under $7,000. Students who earned a bachelor’s degree or less reported owing totals of less than $10,000, while those who earned a post-graduate degree reported debts of $45,000 on average. Those with a bachelor’s degree only reported owing totals of $25,000 on average. This goes to show that the amount borrowed by students for education varies widely depending on the institution attended and degree earned.
Almost four out of every ten adults under age 30 owes student loan debt.
Of adults between the ages of 18-29, 37% report that they currently have student loan debt remaining from their own education. This percentage does not include those who used credit cards or other loans to pay for their educational expenses, but rather only those who took out specific student loans to pay for their college education.
Increased Risk Factors
As people get older, outstanding student loan debt becomes less common. Roughly one out of every five people aged 30-44 (22%) still has outstanding student loan debt, and this number dwindles to a just 4% when adults over the age of 45 are surveyed. While it may appear that these reductions in student loan debt among older demographics is simply due to those loans being paid off, the reality is more complicated.
Research done by the National Institution of Education Statistics has shown that students of today are far more likely to take out student loan debt to finance their college education than previous generations were. Roughly two thirds of students entering college during the 2011-2012 school year took out new student loan debt, which represents a sharp increase from the roughly half that took out student loans twenty years prior in the 1989-1990 school year. This shows an upward trend in the need for student loans to pay for college education in today’s economy.
How has student loan debt affected you and your family members? We would love to hear from you in the comments below!