How Student Debt is Hurting Americans
By: Alex Lago
Tags: Politics, Student Loans, Debt, Money, Economics

More than half of American college grads graduate with some form of student debt.

US student loan debt totals 1.7 Trillion dollars and the average debt of someone from the 2019 graduating class is $28,950.

Things get worse when a student decides to go past a Bachelor’s degree — which is now necessary for the ever-competitive job market.

Degree Inflation

Due to a phenomenon called degree or credential inflation, more people are getting their Bachelor’s degrees. This is a result of more methods of credit to finance education, but there is a downside; It has become less valuable.

Something similar has happened with graduate degrees.

Nearly 2 in 25 people age 25 and over have a master’s, about the same proportion that had a bachelor’s or higher in 1960. “Several years ago it became very clear to us that master’s education was moving very rapidly to become the entry degree in many professions,” Dr. Stewart says. (Pappano, NYTimes).

Now the number of Master’s degrees has doubled since the 1980s.

To make things worse, the average debt for graduate school significantly bumps up the student loan debt people owe from $28,950 with a Bachelor’s degree to $71,000 with a Graduate degree.

Some other popular debts include law school at $145,500, MBA at $66,300, and medical school at $201,490.

Insurmountable Debt For an Average Life?

As a result, it is impossible to be economically viable and buy a ticket into the middle class without a significant nose-dive into a ton of student loan debt.

A 2021 high school graduate could expect to borrow $38,147 for their bachelor’s degree, according to a May 2021 NerdWallet analysis of National Center for Education Statistics data.

It looks as if the situation will only get worse as time goes on.

In quarter three of 2010, Americans owed roughly $845 billion in student loans which means that U.S. student debt has increased by approximately 102% in the past decade (Hess, CNBC).

This increase in average debt and debt percentage to get a less valuable education has sparked a debate among politicians last year. Many propose a pardoning of $50,000 in student loans but nothing has been done yet.

Despite President Joe Biden’s campaign promise of reducing student debt by at least $10,000, there is no apparent movement in the works. In the meantime, Biden claims he is reviewing the legality of student loan cancelation but has not included it in his annual budget.

Issues With Student Debt

Among the many issues of student debt, there is a stark one — the fact that one-fifth of a former student’s income is going towards student loan repayment, according to a TD Bank Survey.

The average monthly debt payment for borrowers is $579. One in five dollars of borrowers is being used to pay for loans. This represents a severe handicap on former students and doesn’t allow them to spend on homes or children.

Most Americans with loans also have plans to pay back their debt for 4 or more years after graduation. About 24% of borrowers expect to need 10 or more years to pay off student loans.

About one-third of millennials have delayed buying a home, 21% have delayed getting married and 26% have delayed having kids.

Not only does this disrupt future plans, but it also puts a hamper on savings. Many younger professionals may not have as much career mobility or the ability to do things that they want to.

The purpose of going to college and getting loans is to later have a better life, but these statistics prove that this may not be easily achievable.