The current pace of student loan debt is unsustainable and the financial aid system is a mess that confounds students and higher education institutions alike. The real nightmare begins after graduation: in 2014, an average college graduate carried more than $30,000 in loan debt. More than two million people defaulted on their student loans.
Student Loan Debt Statistics
Current estimates from studentloanhero.com put the total U.S. student loan debt at $1.26 TRILLION, up from $447 million a decade ago, with $50.8 billion of those loans currently in default and another $188.7 billion in deferment or forbearance.
It may surprise you to know that more than 43 million Americans have student loans, with monthly payments averaging $351, which might not seem like such a big deal except that the gap between what students owe and what they are making in the workforce has widened dramatically since 2005 and there is no reason to believe the gap is going to narrow any time soon.
Is the Debt Worth It?
While it is still true that people with a college degree make significantly more than those without a degree, the instability and slow growth of our economy over the past 10 years has led to higher unemployment in almost every field, regardless of education. That trend is turning around, at least for college graduates, according to Inside Higher Ed.
The IHE article, from Dec. 1, 2015, cited statistics from the U.S. Census Bureau and Georgetown University indicating that in 2015, college graduates with at least a bachelor’s degree had an underemployment rate of 6.2 percent. Those with graduate degrees had a rate of 4.2 percent. Compare those figures with 12.9 percent underemployment for high school graduates and 18.7 percent for those who did not complete high school. Underemployment for the population as a whole was 9.9 percent.
Yet the fact remains that we continue to hear from students — particularly those who graduate with degrees in areas such as languages, social studies, history, or philosophy — who are unable to find jobs in their field that pay enough to make their loan payments.
The Impact of Student Debt
What most potential college students are totally unaware of when they take out student loans is what happens if they cannot make the required payments. Student loans are not dischargeable in bankruptcy, so there is no way to eliminate them — ever. We are already seeing that students who graduate with high student debt are more likely to delay major life events such as getting married, buying a home or having children. They are also more likely to take a job outside their field if it pays better, or to work more than one job to meet expenses.
Results from a recent national survey even found that heavy student debt negatively affects relationships. Two-thirds of those surveyed viewed a potential partner’s debt as ‘baggage’ and 12 percent viewed student debt as a bigger issue than being divorced, having a child from a previous relationship, or having a criminal record.
There is also evidence that black and Hispanic students are affected even more severely than their Caucasian counterparts. Black students, for example, generally incur larger loans and are more likely to drop out before graduation. Even those who graduate face lower average earnings than white workers.
Finding a Solution
We believe that, much like the housing industry in the mid-2000s, there is a coming ‘bubble’ in the student debt market, which will be made exponentially worse due to some or all of the factors outlined above.
Colleges and universities are in a unique position to help solve (or avert!) this crisis by taking a hard look at the way they provide financial aid and helping students minimize education debt. From instituting a “no-loans” policy to supporting legislation that caps the amount students can borrow for education, to limiting financial aid to specific degree programs and providing better financial aid counseling, higher ed institutions can play a vital role in reforming student debt.
Getting an Affordable Degree
Don’t let the financial burden be the reason you choose not to get your degree. Missouri Baptist University offers affordable programs and will help you develop the best plan of action for your circumstances. You can learn more about financial aid at MBU by visiting https://www.mobap.edu/financial-aid/.
