Thinking of taking out a big loan to pay for college? Before you do, take a look at these numbers on student loan debt from the Guardian. They paint a pretty depressing picture of post-college life.
The most notable number is, of course, the total level of student debt in the US, which is now just over $1 trillion. But beyond that headline data, many of the specifics make the overall situation even worse. Most troubling is the fact that student loan debt for many students is increasing after they leave college. In 2011, members of the class of 2011 held $22,900 in student debt on average; that number has risen to $26,600. Rather than slowly digging themselves out of the debt hole, many graduates are digging deeper into it.
The jobs data for recent grads is equally disheartening. Last year’s college graduates have an average starting salary of $44,482, less than twice the average debt level. There are 280,000 BA holders working minimum-wage jobs (if not flipping burgers), as well as 37,000 advanced degree holders doing the same. We can’t say for certain, but it’s reasonable to assume that many of these people have significant student loans, which will be difficult if not impossible to pay off at that wage level. Given these dismal statistics, it should come as no surprise that more than 13 percent of loans lead to default.
College debt is rising to its highest point just as the opportunities for college grads have been shrinking. It’s not that students should avoid college, but at the very least students need to start thinking hard about what they’re studying and how much they’re paying for it.
Consumer advocates want more disclosure and more oversight on every kind of consumer loan: car loans, mortgages and credit cards. But they fall strangely silent when it comes to consumer protection and counseling on the largest and most onerous loans that many young people sign up for. 18 year olds signing up for life changing loans need a lot more information about the economic consequences of the steps they are taking — and a college’s financial aid office can’t really be trusted any more than a used car salesman can be trusted to explain the credit products his company offers.
Nanny staters worry about what size sodas we are drinking and how much salt a restaurant is putting on our fries, but nobody seems to care much about a generation of young people signing their futures away based on limited information.