Seven in Ten College Graduates in Debt. How will Millennials come out of this Mire?
Student loans, which were recently compared with home loan bubble of 2008, have shown the signs to prove the comparison right, in a study conducted by The Institute of College Access and Success. With Six states having average debt more than $ 30,000, condition of the rest of the states is also not very good. For public and nonprofit graduates, state averages for debt at graduation ranged widely in 2013, from $18,650 to $32,800, and new graduates’ likelihood of having debt ranged from 43% to 76%. The study revealed that approximately 70% of college students who graduated from public and nonprofit colleges in 2013 had student loan debt, with an average debt of $ 28,400 which is 2% more as compared to last year’s average student loan debt.
New Hampshire is the state with highest average debt ($32,795) among the 6 states having average debt amount more than $30,000. The other 5 states include Delaware, Pennsylvania, Rhode Island, Minnesota and Connecticut, while New Mexico is the only state with an average debt of less than $20,000.
129 colleges nationwide have average debt of more than $35,000 and 49 reported that more than 90% of their graduates left with debt. At college level debt varies from $ 2,250 to 71,350. At 18 % of the colleges, debt rose 10% minimum, while at just 7% of the colleges it went down 10%. The total debt depends on various factors such as, endowment resources available for financial aid, student demographics, state policies, institutional financial aid packaging policies, and the cost of living in the local area, therefore, there are a few colleges with lower college fees but higher average debt.
Although higher studies pave the way to career growth, it brings financial hardship for students because of the huge amount of student loan debt. Sometimes students suffer throughout their lives due to the absence of proper guidance or, if not for ever, then at least for their initial period of career, in which they think of buying house, car, getting married or starting a business. Because of huge pile of student loans, they tend to delay many other personal decisions. Several reports showed that tuition fees are increasing at a slower rate in the recent years, however, the fact that buying power of minimum wage has dropped more than 9% since 2009, makes tuition payment an increasingly harder thing to do for students. Despite above facts, a 4-year college graduate earns more than a high school graduate and is less prone to risk of unemployment. Thus, higher studies are still the best way to find a better paid job, and student loan is the only way to get into the college for most of the students.
Although government has been working actively on student loan problem and has come up with various plans such as free counselling services to make loan repayment easier for the borrowers. In spite of all these efforts, student loan problem is spreading like a wildfire, and the student loan debt has reached to $1.2 trillion from $260 billion, during the past 10 years. When efforts by government and colleges does not seem to be effective enough, private sector’s specialized attention to student loan issue, may become helpful for individual borrowers to prevent them from getting deeper into debt.