Is there a student loan bubble about to burst?
According to the Pew Research Center, more college students are completing four year degrees than ever before. In fact, among students ages 25-29, 33 percent are finishing four year degrees, up from 17 percent in 1971.
At first blush, this rise in college students pursuing four year programs seems like it can only be good. Pursuing education is vital to individual success and the collective trend towards higher education across the population is a positive trend. But are there any costs associated with this upward trajectory?
Recent data points at an alarming trend, a trend that illuminates the potential pitfalls of such growth. With the help of some data provided by a shocking new interactive website, some of the terrifying statistics underlying this trend are laid bare.
As any student knows well, pursuit of a four year degree can be extremely costly. For private institutions in particular, students often elect to take on an inordinate amount of debt in order to complete their education. In an economy with stagnant or negative job growth, graduating students are facing their debt without serious prospects for paying it off.
In aggregate, there are over 864 billion dollars in Federal loans outstanding, with an additional 150 billion dollars in private student loans held by individuals -- student debt in America now exceeds 1 trillion dollars. With student loan debts now exceeding that of credit cards, graduates are burdened with an average of $34,703 each, representing an obstacle that for some can seem insurmountable.
In total, Americans owe approximately 11.3 trillion dollars in debt overall, with $7.98 trillion coming from mortgages. With $850.9 billion in total credit card debt nationwide, the $1 trillion dollar collective weight of student loan debt represents one of the largest financial burdens Americans are facing today.
With two out of every three students graduating with debt, graduates across the country have begun to question the true value of their educations. Recent reports show that as high as 57 percent of Americans now believe that college is 'not a good value,' with 75 percent saying that college education is too expensive for Americans to afford.
The debt carried by so many has started to impact graduates in a way that has the potential to seriously impact our economy in a negative way. In fact, according to Pew Research Center, 48 percent of graduates say student loans have made it harder to pay their other bills, with 25 percent claiming such debts have made it harder to buy a home. These outstanding debts are also having an impact on personal decisions made by graduates, with 24 percent reporting their debts have impacted their career choices. As much as 7 percent of those asked also report their debts have caused them to delay getting married or having children.
Despite many students receiving grant and aid money, one of the reasons behind the growth in student loan debt is rising tuition costs. In the past 30 years, tuition to private four-year universities has risen dramatically, closing in on an average of $30,000 per year. With the proliferation of for-profit universities and online schools, it's no wonder that more and more students are leaving college with a mountain of debt and increasingly bleak career prospects.
More families are burdened by student loans than ever before, at a higher amount of debt than ever before. With student debt climbing 511 percent since 1999, its no wonder we're on the brink of crisis. With access to debt and credit easier than ever, the student debt crisis could potentially be the next big bubble to burst.
Additional sources:
1. Pew Research Center tabulations of March current population surveys, 1971-2012