Last year was the first time student loan debt outpaced credit card debt. This year, it is expected that student debt will top a trillion dollars. These numbers show that people will be paying their loans off for a longer amount of time than they have in the past. It’s believed that a lot of people will still be paying off their student loans when it’s time for their kids to go to college, said Mark Kantrowitz, publisher of FinAid.org and Fastweb.com. Statistics show:
- Two-thirds of bachelor’s degree recipients graduated with debt in 2008, compared with less than half in 1993.
- Last year, graduates left college with an average of $24,000 in debt.
- According to the Department of Education, about a quarter of students at for-profit institutions defaulted on their student loans within three years of starting to repay them.
And the numbers aren’t expected to get any better any time soon. It’s expected that Pell grants for low-income students will be cut and tuition for public universities will continue to increase due to budget cuts.
Education policy experts are also looking at the rising debt and its implications on how the next graduating generations will buy into other large investments. People who leave college with a lot of debt may not have the option to do things like buy a home, start a family, start a business, and save for their kids’ education, says Lauren Asher, president of the Institute for Student Access and Success.
However, there are still students and experts who believe that student loans are a “healthy investment.” College Board reported those with bachelor’s degrees who worked full time in 2008 were making $55,700, which was $21,900 more than earnings of high school graduates.
What do you think? Is an average of $24,000 of debt an investment or a number that will be detrimental to the transition into the world of work?