18 Sobering Facts About The Unprecedented Student Loan Debt Crisis In The US

Tyler Durden's picture

Submitted by Michael Snyder of The End of The American Dream blog,

The student loan debt bubble in America is spiraling out of control, and it is financially crippling an entire generation of young Americans.  At this point, the grand total of student loan debt in the United States has reached a staggering 1.2 trillion dollars, and an all-time record high 40 million Americans are currently paying off student loan debts.  Just when our young people should be planning on buying homes and starting families, they find themselves financially paralyzed by oppressive levels of debt.  What makes all of this even worse is that only some of our college graduates are able to get the “good jobs” that we promised them.  So with limited job prospects and suffocating levels of debt, this generation of young Americans is increasingly putting off major life commitments such as buying a home and getting married.  As a society, we really need to rethink how we are “educating” our young people, because what we are doing now is clearly not working.  The following are 18 sobering facts about the unprecedented student loan debt crisis in the United States…

#1 According to the Wall Street Journal, the class of 2014 is “the most indebted ever“…

As college graduates in the Class of 2014 prepare to shift their tassels and accept their diplomas, they leave school with one discouraging distinction: They’re the most indebted class ever.

 

The average Class of 2014 graduate with student-loan debt has to pay back some $33,000, according to an analysis of government data by Mark Kantrowitz, publisher at Edvisors, a group of web sites about planning and paying for college. Even after adjusting for inflation that’s nearly double the amount borrowers had to pay back 20 years ago.

#2 In 1994, less than half of all college graduates left school with student loan debt.  Today, it is over 70 percent.

#3 Approximately 15 percent of graduate and professional school students leave school with student loan debt balances in the six figures.

#4 At this point, student loan debt has hit a grand total of 1.2 trillion dollars in the United States.  That number has grown by about 84 percent just since 2008.

#5 According to the Pew Research Center, nearly four out of every ten U.S. households that are led by someone under the age of 40 is paying off student loan debt right now.

#6 The median net worth of young households that have student loan debt is 20 percent lower than the median net worth of young households that do not have any student loan debt and that are led by someone with only a high school education.

#7 Among college educated people, the median net worth of young households that do not have student loan debt is seven times higher than the median net worth of young households that do have student loan debt.

#8 In 2008, approximately 29 million Americans were paying off student loan debts.  Today, that number has ballooned to 40 million.

#9 Since 2005, student loan debt burdens have absolutely exploded while salaries for young college graduates have actually declined

The problem developing is that earnings and debt aren’t moving in the same direction. From 2005 to 2012, average student loan debt has jumped 35%, adjusting for inflation, while the median salary has actually dropped by 2.2%.

#10 According to CNN, 260,000 Americans with a college or professional degree made at or below the federal minimum wage last year.

#11 Even after accounting for inflation, the cost of college tuition increased by 275 percent between 1970 and 2013.

#12 Debt for law school students has risen dramatically over the past decade or so

J.D.s certainly don’t come cheap. It’s almost unheard of to attend law school without taking out significant loans. What’s more, the average debt load is mounting: in 2001-2002, JDs borrowed on average $46,500 at public law schools and $70,000 at private law schools; by 2011, those numbers rose to $75,700 and $125,000, respectively.

#13 Last year it was being reported that 34.9 percent of all student loan borrowers under the age of 30 are at least 90 days behind on their student loan payments.

#14 One survey found that 27 percent of those with student loan debt moved back in with their parents after college.

#15 Another survey found that 70 percent of all college graduates wish that they had spent more time preparing for the “real world” while they were still in school.

#16 Student loan debt is causing many young Americans to delay getting married.  The following is from a recent NBC News article

While there is no specific data on student debt-related delays to marriage, a recent study by the Pew Research Center shows that a record number of Americans have never married. The study found the median age at first marriage is now 27 for women and 29 for men. In 1960, the median age was 20 for women and 23 for men.

#17 Many Americans are not even using most of their student loan money to pay for college.  Instead, many are using much of that money to pay bills or stock the fridge

Take Ray Selent, a 30-year-old former retail clerk in Fort Lauderdale, Fla. He was unemployed in 2012 when he enrolled as a part-time student at Broward County’s community college. That allowed him to borrow thousands of dollars to pay rent to his mother, cover his cellphone bill and catch the occasional movie.

 

 

Tommie Matherne, a 32-year-old married father of five in Billings, Mont., has been going to school since 2010, when he realized the $10 an hour he was making as a mall security guard wasn’t covering his family’s expenses. He uses roughly $2,000 in student loans each year to stock his fridge and catch up on bills. His wife is a stay-at-home mother who also gets loans to take online courses.

 

We’ve been taking whatever we can for student loans every year, taking whatever we have left over and using it to stock up the freezer just so we have a couple extra months where we don’t have to worry about food,” says Mr. Matherne, who owes $51,600 in federal loans.

 

Some students end up going deeper into debt. Early last year, when Denna Merritt lost her long-term unemployment benefits, the 49-year-old Indianapolis woman enrolled part-time at the Art Institute of Pittsburgh’s online program, aiming for a degree in graphic design. She took out $15,000 in federal loans, $2,800 of which went to catch up on unpaid bills, including utilities, health-insurance premiums and cable.

 

“Obviously, it’s better not to use it that way if you can help it, because you’re just going to owe that much more later,” says Ms. Merritt, a former bookkeeper.

#18 Only 28 percent of Americans know that the U.S. government can garnish wages and withhold tax refunds if student loan debts are not repaid.

It should come as no surprise that the delinquency rate on student loan debt in this country is far higher than the delinquency rate on mortgages, auto loans and credit card debt.

This is a financial bubble that gets worse with each passing year, and if we continue on our current course it is going to end very, very badly.

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So Close's picture

indentured servitude is back.  But now you have to work off your apprenticeship to the banks.  How are you supposed to "buy" a house (I wish people would use the correct terminology and just say rent from the bank.) when your monthy payment to pay off student loans is what it is... especally when the first thing most people do when they graduate is go out and "buy" (rent from the bank) a car.

max2205's picture

Wait, the govt loans/gives you cash for school but you can spend it on crack instead....

Winning!

AssFire's picture

University of Phoenix degree qualifies you for assistant crack whore... but, usually got to go to a historically black college to achieve full blown crack whore.

Bayou Classic halftime is hilarious display of devolution; I hope everyone involved is high on crack.

CH1's picture

College: The ante-room to debtor's prison.

PT's picture

Average student loan = $33k.  What is the price of the average house over there?  And what is average weekly earnings?  So, in theory, the price of the average house should fall by $33k.  Or $66k if the average house is bought, on average, by a college graduate couple.  Or the houses will be bought by high-school leavers and the grads will go homeless.

Anyone care to comment?

The9thDoctor's picture

When the bubble popped in 2007, houses should have easily returned to 1998-levels by 2010.

With all of these cash-only Chinese investors pouring in, housing has gone total koo-koo for cocoa puffs level of absolute insanity.

For virtually everyone I know personally in the Xer generation, it's these outlandish mortgage rates holding them back.

$700 a month used to get you a nice brand new 3 to 4 bedroom house in suburbia in the late 1990s.  Nowadays you're looking at $2,000 a month.  $700 a month today, gets you a dilapidated house in the ghetto at the end of the airport runway.

 

These grads are going to land $11 an hour jobs, making $2 moar an hour than their high school graduate peers.  A home mortgage is not even on their radar screens.  Even at $20 an hour, good freakin' luck!  With these loans, they might as well live at mom's house forever.

 

For the boomers, one income (the dad working) could support a household with a stay-at-home mom, and kids.  For today's millenials, its both boyfriend/girlfriend working 2 part time jobs with oddball hours, no kids, and they are renting. 

 

boogerbently's picture

They accepted the loan willingly.

When they work, they can repay.

The same sympathizers, here would cut off Soc Sec TOMORROW, if they could.

Got consistent thinking ?

stoneworker's picture

With that logic those that paid for social security willingly paid somebody for their social security. I am pretty sure I did not sign any contract with them so if they have a problem they should take it up with whoever they had the agreement with.

boogerbently's picture

By the same token, an agreement was made by the govt upon forcing me to "save" with that tax.

PT's picture

Run with the wolves or run with the cockroaches. 
Decisions, decisions ... shame I'm not a wolf.
Or a cockroach.

But then, I guess if I had the choice I'd be a bloody great big Flame Thrower.

ILoveDebt's picture

Well, the problem is student loan debt has a default repayment period of 10 years.  You have other complicating factors when comparing it to housing loans since you aren't paying for the taxes, PMI and other potential costs rolled into a mortgage, but yo udo have interest, which is typically higher on student loans so for the sake of simpliclity, we'll consider the two loans to have equivalent costs above just the principle.

 

So if you have 33K of student loan debt which is expected to be paid over 10 years, it would be the equivalent of lowering your home purchasing power by 100k on a 30-year loan.  That's still a bit of a simplification, but as a rough rule-of-thumb, it works, aka, student loan debt x 3 = diminished max home purchase price.  

EBT excepted's picture

yeah, ma wife go to dee U of P'hoe-nics, got dee assistance degree...but den dee EBT 101 class jus pick up dee income exponenshul-like...assistance like dat be mo' betta'...now she gon' gadeate to da wefare skoo...

just-my-opinion's picture

I saw an ass-fire goin down Woodlands Park way....must have been you

 

SAT 800's picture

If this .gov is the result of popular democracy; we better try something else; fast. Another 100% .gov caused problem; also 100% predictable/ foreseeable.

Buck Johnson's picture

I know, I can't look into buying a house because of my debt.  They don't realize that this non-discharbeable debt is like a millstone on the economy.  Sooner or later they will have to write off this debt in order to increase GDP.

 

 

PT's picture

Do they want you to have $33k in the form of student loan debt or would they rather you have that $33k in real estate debt?  That is the question.  (And don't expect the extra 33k to buy you a better house - it will be the same one!)

Normalcy Bias's picture

Most of this this debt, just like Fedgov's unfunded liabilities, will never be repaid.

Freddie's picture

Let em eat cake.  Most of them voted for this twice.  A life of debt serfdom is like Hope and Chains.

bbq on whitehouse lawn's picture

We will know more about this outbreak by holloween, you wil just have to wait.
We will just have to wait a few weeks to see who lives and who dies. Then we will know what to do with any prep work that might need to be done with finance.

LetThemEatRand's picture

Interesting issue here.  I am an Ebola denier by necessity.  I've taken several flights in the last few weeks for business, and even if you try to wash your hands in the airplane bathroom you have to press the sink button while you do it.  I did ask for the no-vomiting section, and fortunately that was available.  At what point do they shut down commerce by scaring everyone?  And is this the plan?

Jack Burton's picture

All joking aside Rand, I have had some bad experiences with long haul Air Line flights to Europe over the last decade. By nature I rarely get ill, but I have gotten ill shortly after a long haul flight on 5 of the last 8 times I flown the pond. There is ALWAYS one or two people coughing their lungs out up forward, in back or right funking next to me! Two of the exposures were to rather serious illnesses of viral nature. Actually doctors have no clue as to what most viral infections even are, a medical friend says the many mysterious and damaging illnesses are simply unknown viral infections floating around. And an Air Liner is heaven on earth for the virus! Closed up, recycled air over and over. One cough back aft will soon be circulated all over. Colds and flu like illness were what i mostly caught. But two times I got very ill.

Ebola in a plane. Infectious Ebola. A fucking nightmare!

I hear ISIS is thinking of using Ebloa infected suicide bombers to spread the disease. Or was it the CIA? I forget.

Freddie's picture

Dude.  Viruses can run rampant on a cruise ship which is somewhat open with frssh ocean air.

An airliner is a bloody petri dish.  I go out of my way to stay out of airports and hospitals.

Cheduba's picture

Ebola is just to distract people from the collapsing global economy and an excuse to declare martial law.

I'd be much more worried about dysentery than ebola when the power goes out and our just in time inventory system shuts down wastewater treatment facilities...

Cliff Claven Cheers's picture

Obviously you just commented without actually watching the documentary.  Ebola could definitely hasten the collapsing economy.

jerry_theking_lawler's picture

nah, if the power goes down, don't be in the planet earth as nuclear reactors/fuel pools will all melt down. If the system totally collapses, there is no escape.

LetThemEatRand's picture

"18 Sobering Facts...."

Didn't work on me, but am I okay to drive now?

Bangalore Equity Trader's picture

Listen.

"OMG I can't pay my loan I have eBola!"

Bumbu Sauce's picture

Good thing we offshored all those good paying manufacturing jobs that only required a HS diploma.

bbq on whitehouse lawn's picture

The loan paid off if you die or after 30years of no payment.

bh2's picture

The more money provided to feed the education sharks, the ever hungrier they become for more.

Tuition and other fees rise because of increasing demand. Cut the source of the demand (seemingly "easy money" assuring only bleak future debt slavery) and rich universities can no longer raise rates. Or they can go out of business if they cannot adjust to economic reality.

We have far more degrees issued than we have useful jobs on offer for the credentials obtained.

The answer isn't to grind out ever more numbers of indebted youngsters with mis-matched educations.

Only university bureaucracies and academic princelings benefit from that useless activity.

Strike the root.

Mareka's picture

Best to make loans to young naive people who have no idea what they are agreeing to.

It makes it even easier that they have already been brainwashed to believe that they must attend college at any cost.

An 18 year old has no concept of what it takes to pay off a loan, $1,000, $10,000, $100,000, there is no difference.  It is just a number.

The banking sector is made up of criminal vampires, feeding off of our young yet no protest is raised aside from an occasional comment on sites like this. 

Pre-approved credit card offers showing up in the mail for my high school aged son.  I called the number and raised hell.  The woman on the other end of the line was mystified that I would stand in the way of my child's opportunity to establish good credit.

My response.  You have my name and my street address.  I'd like the name and street address of the individual who made the decision to market credit cards to high school kids.   No response.

 

Vampires.

Yes_Questions's picture

 

 

20th Street and Constitution Avenue N.W.
Washington, D.C. 20551

 

OceanX's picture

Well, I'm not young...

However, I received a check in the mail today. $2500 and change, "just deposit it in your bank account"  I flipped it over to see the terms, %30 annual interest! Just 30 payments of $122.00

Yeah right, of course it went straigtht into the trash,

Dingleberry's picture

Agreed, but colleges are just as bad, if not worse.

They are in cahootz with the banksters. 

No such thing as a public college....they ALL are in it for the money.

They know an easy mark when they see one.

PT's picture

Re  "An 18 year old has no concept of what it takes to pay off a loan, $1,000, $10,000, $100,000, there is no difference.  It is just a number." :

Well they're supposed to.  That's what it means to be an adult.  That is why we learn maths at school.  It's not like they weren't given the chance.  I was in my mid-teens when I wrote a computer program that did all the required manipulations for calculating compound interest.  Yes, geometric progressions and algebra were involved, and yes, for one particular form of the main equation I had to resort to successive approximations to calculate the answer.

But the average yob doesn't have to think that hard.  All they have to do is some basic arithmetic to work out what they can afford and then go to the bank man and say, "I can afford $xxx in repayments.  How much can I afford to borrow?"  Errr, that won't work any more because banksters can now lend anything to anyone but 30 years ago those simple words would be enough for an intelligent discussion.

So what we have now is that THOSE WHO SHOULD BE GOING TO UNI, DON'T TO TO UNI, BECAUSE THEY HAVE DONE THE MATHS AND DON'T LIKE THE ANSWER IT IS GIVING THEM.  Hell, it's bad enough signing a one-sided contract (I don't know about your country but in ours the govt can and does double fees whenever they feel like it and change the repayment terms whenever they feel like it).  How many brain cells does it take to decide, "I don't want to sign a blank contract that the other guy can change at will"???  But I have to agree, there are still plenty of well-meaning parents out there that will say, "Don't worry about that darling, it will all turn out okay".  So in order to go to uni, one must either be bad at maths or naive enough to believe it won't matter, and naive enough to sign a blank contract.  They're our future!

And for those who aren't as fanatical about maths as me:  Let me remind you that you didn't have to build your own compound interest calculating computer program - all you had to do was a little real-world arithmetic to figure out what you could afford and then talk to an honest banker, whoops -you were doomed on two accounts.  You need to live by yourself for a couple of weeks so you can discover the real-world price of groceries (your parents cater for a whole family, not a single uni student) and you need to find an honest banker.  If it is any consolation, it was my lack of social skills that caused me to drop out of uni ( tedious story but in short - lack of social skills because I couldn't handle a needy gf who wouldn't let me study ) - a lack of social skills caused by the intense amount of study I did as a youth (my own choice - I had dreams and goals ) which left no time for socializing but otherwise made me the exact guy who should have gone on to uni.

In my case, the fact that I couldn't handle a needy gf made me drop out.  Uni fees and the absurdity of the one-sided contract ensured that I wasn't in a hurry to go back.  Damn shame because the ten years before I went to uni was a continuum of proof that I was supposed to be there. 

After I dropped out I thought, "No worries.  Things didn't go as I expected but with hard work and enthusiasm I can still make things happen."  I was wrong.  For over 20 years so far.  And now the enthusiasm is declining.  You can only push as hard as you can on a brick wall for so long.  Eventually you get tired.  Your twenties are an important decade.  If you have dreams and enthusiam, don't waste your enthusiasm.  Conserve your enthusiasm and be quick to leave when it does not generate a return and try to find somewhere where it will generate a return.

The9thDoctor's picture

The public school system offers ZERO financial education.  Plus 18 year olds were brainwashed by their teachers and guidance counselors that if they don't go to college they'll be flipping burgers for $8 an hour for the rest of their lives.  Never being told that they could be promoted to shift lead, than manager, then move on to something else with management experience.

Whenever I encounter late teens, I warn them about the student loan disaster.  Some listen.  Some argue with me, even though I'm in the working world warning them.  They have all of the answers, when their "answers" are regurgitated talking points from the college recruitment reps.

If you're a parent, teach your kids financial education as early as possible because the schools just have your kids play ball games and watch Hollywood movies.  Then they memorize some random factoids and try their best recalling these factoids off of the top of their heads on to "tests".  100% irrelevant to the real world, and a complete waste of time and taxpayer resources.

PT's picture

The kids have near-on 100% trust in their parents and teachers.  Well, the kids that want to go to uni have near-on 100% trust anyway.  That is why they have a hard time listening to you.  Before I hit 18, I was smart enough NOT to trust newspapers or politicians but still had a lot of trust in my parents and teachers - even the ones I weren't too happy with.

All kids think they know everything.  That's how they overcome fear and learn.  No kid thinks, "Who you kidding?  No way can I walk yet!!!  I'll fall over!"  No, they just assume they can do it and ignore all evidence to the contrary.  Thank goodness.  That childish state still exists in teenagers.  "I'll get a good job because I studied hard."  "My parents and teachers told me ..."  It still exists in businessmen.  "I don't know how to do it yet but I'm going to make it happen."  "You need to take on more risk.  You need to manage risk."

atomicwasted's picture

Don't let an 18 year old adult off the hook.  I was fully aware at 18, acutely so, and chose to go to a cheap school as a result.  I could have gone to a top 5 university and didn't because I would have been deeply in debt.  In 1988.  If you hold adults to a lower standard of awareness and intelligence, they will live down to it.

The9thDoctor's picture

I was fully aware at 18 too, but I just got to establish why most 18 year olds will fall for the student loan gimmick. I think 14 year olds could be considered adults, if given the proper upbringing and environment. Unfortunately the progressive era caused arrested development. They got teenagers out of entry level employment/ apprenticeships and forced them into high schools and treat them like cattle and babies. That's why its such a mess.

PT's picture

Shit!  Four red arrows (and no greens) for suggesting that, after ten or twelve years of schooling, 18 year olds should know enough maths to keep themselves out of the shit debt-wise.  WTF???  Or was it something else I said?

Don't gimme a green I don't deserve and don't hold back on the reds but I'm still feeling a bit dumb here.  Someone care to shine a light?

Abbie Normal's picture

Maybe because "maths" is not the short form of mathematics?

DriveByLurker's picture

Abbie - the localized, parochial version of English you learned in your corner of the world is not the same version of English that others learned.  "Maths" and "Uni" are perfectly standard English in a small English speakinig country called England.

gwar5's picture

Is it just my imagination, or are a lot of today's college grads snotty punks who think the world owes them? Those naive self-righteous activists have been given the jobless world and debt slavery they voted for.

Apologies to those this does not apply!

 

 

 

 

hairball48's picture

You have it about  right in my opinion. Not all are ungrateful. Some are just stupid.

PT's picture

In my case I was convinced that anyone who wanted to be as good as me, could be that good if only they would shut the fuck up, listen to the teacher and do the assigned homework.  High school was a noisy place where teachers tolerated a lot of noisy smart-asses that should have been kicked out of class.  My opinion was that the noisy smart-asses were a bunch of favoured, spoilt brats because no way would my parents tolerate that kind of behaviour from me and here they were, being tolerated by parents and teachers alike.

I understood that not everyone wanted what I wanted, and that it takes all types to build a society.  I knew the world needed check-out chicks just as much as they needed rocket scientists ( okay, the check-out chicks are more important, should I swap "rocket scientists" for "doctors" or "engineers"? ), but I had a hard time acknowledging that check-out chicks don't need to learn calculus.  (Yes, I know they don't even need to know much about numbers when the till does all the maths for them but calculus is so fucking awesome!!!  How could anyone NOT want to know that???)

Errr, drifted off topic there for a bit.  I think most of the "snooty uni student" thing is a mis-understanding.  It's not so much that they don't want to talk to you but that they can't talk to you and graduate at the same time.  One of my friends studied law and everyone started whinging that he only had time for his lawyer mates.  Well, he needs to discuss his law problems with like minded people, doesn't he????  Of course he's only got time for his lawyer mates.  He still liked to see everyone else, but when he needed to solve law problems, he needed his lawyer mates.  How hard is that to understand.

But I never understood how the class clown was recognized as much more than a spoilt brat.  Anyone else would be kicked up the ass but he got away with it.  I guess the true crime is not knowing your audience.

The9thDoctor's picture

"Is it just my imagination, or are a lot of today's college grads snotty punks who think the world owes them?"

These college grad punks have smart-ass X-er parents who thinks the world owes them, and snotty boomer grandparents who think the world owes them, so what do we expect?  A freakin' miracle?  The apple doesn't fall far from the tree you know?

seek's picture

Not far from the truth. Some their age understand that this is a broken attitude as well.

The scary thing is, you combine them running up debt with the sense of entitlement, and you have an entire cohort of young people primed to support a leader that promises them everything they want for no effort on their part -- perfect setup for a socialist/communist revolution. Not an accident.

Yes_Questions's picture

 

 

maybe.

 

+1.2Trill