Average Student Loan Debt Is At A Record High – Where’s The Crisis?

I have been sitting and reading your blog posts for a few hours now, as it is snowing and I can’t leave my apartment…

You, as a Princeton graduate, I am assuming have a very high level of intelligence. YOU are not taking into consideration at all the number of people who are dealing with these issues who do not have the same level of intellect, problem solving abilities, emotional strength, so on. This IS a big deal. Maybe just not for you.

How many people graduate from engineering+medical school+plus law school in comparison to EVERY OTHER PROFESSION? Again, we are talking about people that have an above average IQ that will make enough money to pay it off in a reasonable amount of time, if they are responsible enough.

What about the impact it has on people delaying marriage, buying homes, and starting a family? Not only psychological, but on the economy?

How can you say that it is so easy to pay off significant amounts of debt just starting out in life. Many people are not able to work throughout school enough to put a dent in costs. Through half of undergrad and ALL through my two years of graduate school (summers included). I worked 40+ hours a week, required by my program, for free at externships (not only did I work for free but I paid credits for these rotations) and attended night class everyday. Not to mention the service learning class I had to take for two semesters where again, I PAID to volunteer my time. That left me Saturday and Sunday to work (oh yeah, and study?).

Which brings me to another issue…

How many business students I knew who got paid 20+ dollars an hour for externships, and in the health field as well as many others you have to pay for credits to WORK BILLABLE HOURS. Nurses, occupational therapists, speech therapists, physical therapists, physicians assistants, and teachers as well (the people really making the big bucks ;) ). I PAID TO WORK IN COLLEGE.

I feel like the majority of your posts are extremely ignorant, pompous and insensitive. Have you ever worked with the general public for an extended period of time?

Try not to fall off your soapbox, it seems quite tall.

The bigger issue is what else people are walking away with: minimal work ethic, an anti-intellectual disposition (ironic, eh), and a short-sighted understanding of how to apply their education to their life… or, in other words, a lack of creativity.

It’s sad, but you can often graduate with a very small amount of effort. A really interesting book on the subject: Academically Adrift.

From the description:
“… are undergraduates really learning anything once they get there?

For a large proportion of students, Richard Arum and Josipa Roksa’s answer to that question is a definitive no. Their extensive research draws on survey responses, transcript data, and, for the first time, the state-of-the-art Collegiate Learning Assessment, a standardized test administered to students in their first semester and then again at the end of their second year. According to their analysis of more than 2,300 undergraduates at 24 institutions, 45 percent of these students demonstrate no significant improvement in a range of skills—including critical thinking, complex reasoning, and writing—during their first two years of college. As troubling as their findings are, Arum and Roksa argue that for many faculty and administrators they will come as no surprise—instead, they are the expected result of a student body distracted by socializing or working and an institutional culture that puts undergraduate learning close to the bottom of the priority list.”

The “working” part of the last line makes it a bit more complicated, but I think the “socializing” is the major problem (I worked around 30 hours a week for my undergraduate years, in addition to school). If you are focused on partying every weekend instead of developing your intellect and your self, what the hell should any of us expect? The authors document, to the extent that they can, how this is different from decades past.

And this is far too often reflected in most media representations and popular figures of my Millennial peers.

I normally agree with your articles Sam, but you’re way off the mark on this one. There’s been some great comments posted here, and I don’t have time to write a novel, but my basic point is this: your financial discipline, and particular situation, is *very* rare. You know that, right? So when you shrug your shoulders and say “Why can’t someone save 11.5% of every paycheque to pay off their debt? I saved 50% of mine, so what’s the big deal?”, it’s like a 7 foot tall basketball player asking why a five year old kid can’t dunk like he can. :-)

You’re not putting yourself in the shoes of an average college student: financially clueless because their parents didn’t teach them anything about money (and they didn’t make the choice to learn themselves) stumbling through college racking up debt and 4-5 years later (if they’re lucky) emerging out the other side and coming to the realization they may have ruined the next decade or two of their life with debt. Financial success is 80% behaviour and 20% numbers.

I’ve lost track of the number of people I work with and know – grown adults with kids and 10+ years our of college – that still have their student loans. COULD they have paid them off sooner? Yes, if they had the financial skills and mentality to make the necessary sacrifices. But they don’t. They’re not in the same place where you and others here are.

It’s like having an eight-pack set of abs and asking the rest of the country why they aren’t in similar shape: unless you “get it”, you don’t “get it”. Sure, we can all agree that everyone should eat right and get exercise, but does our agreement change that most of the country is slowly getting diabetes? Student loans are no different. It’s become hideously expensive to go to school; tuition is out of control. Sam, have you watched the documentary Ivory Tower? Please do – you’ll find it very interesting.

Many of the comments here are in the same vein – the people reading this blog have a financial mentality outside the norm. Looks at the stats: most people in the USA have very little saved for retirement, and many people live paycheque to paycheque. These are not financially healthy people who will quickly pay off $35K in debt. And let’s not forget odds are high they’ll have another $10-$20K in credit card debt, plus a car payment…

I personally never had any student debt because my parents had saved for my college education, and I also worked while going to school. But when I went to school it was vastly cheaper; today the rates for college can be so expensive there’s no way I’d be able to duplicate what I did back then (even adjusting for inflation).

I didn’t intend to write a novel, but looking at the poll, 70% of so of people are in agreement that there is a serious student debt problem.

Of course there is a crisis. Its a system exploiting the financial illiteracy of kids by selling them on the necessity of a undergrad degree at all costs. I don’t recall at any time the school or FAFSA saying, you know, make sure you stay to degrees like Engineering/Acct/Finance and away from Drama/English/Art. Loads of students end up in debt with little to no job prospects that has any correlation to their studies.

The readers of this site are not the ones getting crushed- its the millions of other people out there with no financial IQ. Is it possible to get out from thousands of debt? Yes. But that doesn’t justify being in the position to begin with. I had no idea what I was doing through college coming from a lower, middle class family with no financial education. I will take responsibility for blindly maxing loans, however, it’s unfair to expect financially illiterate 17/18 year old kids to understand the financial impact of their decisions.

I would disagree with the sentiment that “Few people would not run a cost/benefit analysis of college or graduate school before spending years of their lives and tens of thousands of dollars.” All I can go by is my friends and acquaintances, but from my experience this thought process was unfortunately not routine in families that are firmly middle class (the group that sometimes is caught in the middle between massive family wealth and generous tuition assistance). Definitely not 10 years ago, maybe a bit 5 years ago, and probably starting to creep into people’s thought processes in the last few years.

I firmly believe, like most others here, that education is the key to opening new doors, and there should be systems in place to help the less fortunate with tuition assistance. But I am also adamant that the federal backing of student loans is compounding the problem. Unsecured debt to an 18 year old, no questions asked. Who thinks this is a good idea?

So, of course, what do the banks do? They want to join in on the fun and get a piece of that student loan action with their private loan sharking ways. And, of course, what do universities & colleges do? They raise the price at astronomical rates to increase revenues. The government is backing it – so why not???

Student loan debt is one of the biggest issues facing this country in the coming decades and I’m very interested to see how it will continue to affect demographic trends. We can already see the short-term impacts of so many millennials living at home, at least primarily due to student loans. But as one of my friends says, “people want nice things”. The idea of many people going into debt up to their eyeballs isn’t going to change in the consumer driven USA.

I have to say, usually I’m a glass half-full kind of guy…

Two things: 1) FS noted that people might be confusing inflation with growing debt figures. The column chart by year shows nominal dollars, and the 2015 figure of $35,000 backs out inflation to $21,000 in 1993 dollars. 2) Taking on big debt and not getting it handled is a big character issue. Every statistic is made up of real people, with real stories. In my own experience, I’ve seen people under age 30 go on about their lives, get a job, get into a serious relationship, and when the subject of marriage comes up, WOW! The person with the debt (in one case, over $100,000 for a professional degree and license) expected the marriage partner to embrace it as a part of the “total package” and was surprised it wasn’t embraced like a longtime pet. It can be a deal-killer, and rightly so. In another case, a pal of mine married a recent graduate of dental school, paid off her $80,000 debt, and she divorced him two years later to go on with her debt-free and high-paying career.

If universities offer rebates to low-income families, that’s good news but it’s the job situation that makes student debt difficult to pay off. You showed us the math and it all looks good on paper, yet I wonder if $2,800 is enough for each month, considering that many of these debtors will carry the debt after they get married and start families – if they choose to delay these life choices, then they are missing out on life.

But maybe that all is manageable, as you said. Let’s not forget that many of these citizens carry consumer debt at the same time too, so all of a sudden your salary (even if it is around $50,000 per annum) is insufficient to pay back the monthly installments of debt and once it starts accumulating thanks to the magic of compound interest rates, you’re in for a ride!

I am so happy to read this post. I went to a private college and got a BS and MS in engineering that left me in $88K of student loan debt upon graduating. This would have been more, but I was working multiple jobs throughout college to afford the $40K/yr price tag. Like some others have said, the FASFA really screwed over my family because it valued their house at an insane amount even though they had a substantial mortgage. I’m pretty sure it also looked at my parent’s retirement accounts as assets that could be liquidated, but that was not an option.

Anyway, after graduating with $88K in debt, I continued to work 2, 3, 4, and even 5 jobs at a time to make as much money as possible. My first real job started at 50K but has risen to just over 100K in 6 years. Even though I am making this money now, I am still working side hustles to make extra money, and can easily make an extra $2-300 a week with minimal work from home, mostly through websites like fiverr, crowdsource, and other freelancing platforms. Sometimes I still help out at a friend’s restaurant waiting tables and can make $2-300 in a night!

On top of this, I also went back to school while doing all this work and got a professional degree in an unrelated field that is going to allow me to open up my own business on the side. I’m hoping that this will net me around $10,000 extra each year.

The thing that really resonates with me, though, is how few people are willing to put in the time, and to make smart life choices so that they can reach financial independence. With all this work, I was able to pay off my $88k in loans and finance a professional degree without taking out any new ones. I also bought a house and have a very reasonable / manageable mortgage payment. I save roughly 20% of my income for retirement when you count the employer match. AND, I still can go out for nice dinners, go to sporting events, go on a week or two of vacation each year, go to shows, have nice clothes for work and casual events, drive a decent car, and afford home improvement projects on my house.

Every time I hear some sob story about people who are stuck in debt from student loans, I also hear stories about how they waste money on useless wants, go on extravagant vacations they cannot afford, eat out at fancy restaurants for every meal, and sleep-in every chance they get. They never tell as part of their story how they are working a second job, or how they are trying to save up for something. Instead, they are racking up credit card debt on top of student loan debt, complaining about it, and not thinking about the future at all.

We really need people in college and recent graduates to be more responsible for their own decisions. I think that is where the solution begins.