Student-loan debt in the US, the UK, Australia and elsewhere is at an all-time high. The consequences of student-loan debt have a domino effect and a very detrimental effect on the community as a whole. Millennials are delaying life milestones because they can’t afford them.
In the US, while wages have increased by 67% since 1970, college tuition has increased at an even faster rate. Consequently, student debt has reached record levels. Coupled with the fallout from the recession and a high cost of living, student-loan debt has made it difficult for millennials to save and has forced them to delay milestones like getting married, buying a house, and having kids.
Here are 10 facts that show just how dire student-loan debt is.
1. In the US, the national total student debt is now over $1.5 trillion.
2. College tuition has more than doubled since the 1980s. From the late 1980s to 2018, the cost of an undergraduate degree increased by 213% at public schools and 129% at private schools, adjusting for inflation. During that time, annual tuition rose to $9,970 from $3,190 for public schools and to $34,740 from $15,160 for private schools.
3. More than 3 million US senior citizens are still paying off their student loans. Young people aren’t the only ones paying off debt. More than 3 million Americans ages 60 and older owe more than $86 billion in unpaid student loans.
4. 101 people in the US owe at least $1 million each in student loans. Costs for professional degrees are rising too. In 2013, only 14 people in the US owed $1 million or more each on their federal student loans. By 2018, that had increased to 101 people. Interest rates for graduate students increased by more than 6 percentage points from 2004 to 2012.
5. Black families carry more debt than white families and are more likely to default. Black graduates with a bachelor’s degree default on their loans at five times the rate of white graduates. They are also more likely to default than white college dropouts. Graduates of historically black colleges had 32% more debt than students at other colleges and that most had not paid off any debt in their first few years out of schoolCarrying student loans keeps the wealth gap between black and white families startlingly wide. With student debt, young white families had 12 times as much wealth as black families, eliminating that debt lessened that to just five times as much wealth.
6. Up to 40% of borrowers could default on their student loans by 2023. The rate at which people defaulted on their loans continued to rise 12 to 20 years after graduation. Predictions are that nearly 40% of borrowers could default on their loans by 2023.
7. Of people who file for bankruptcy protection, 32% carry student-loan debt. Of the people in that group, student-loan debt made up 49% of their total debt on average.
8. Student-loan debt causes 13% of Americans said they decided not to have kids. That’s among those ages 20 to 45, Student-loan borrowers are also delaying or refraining from buying a house, because they can’t afford it.
9. Parallels between the student-debt crisis and the subprime-mortgage disaster. The rate at which student-loan borrowers can’t pay their debt looks a lot like the rate at which people could not pay their mortgages during the 2008 financial crisis. As of 2017, default and 90-day delinquency rates for student loans hovered at 11%. Those with lower debt were actually more likely to default, since those with more debt tend to have degrees that lead to higher-paying jobs. Those with less initial debt, meanwhile, likely dropped out without a degree to get a better-paying job. That’s not the only parallel between today’s student-loan crisis and the financial crisis: Total US consumer debt was higher in the first quarter of this year than it was in 2008.
10. Nearly 50% of millennials with student-loan debt think college wasn’t worthwhile. When asked whether it was worth attending college based on their current financial situation and their student loans, about 21% of respondents said “definitely not” and about 23% said “probably no.” Student debt is a disaster that must be solved as soon as possible. It is really holding up our economies.
I thought my student loans were great when I got them. Now they’re outstanding!