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Student Loan Debt in America

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Let’s get specific about the student loan debt situation here in America. I know, you’re probably tired of my campaign to warn aspiring (and current) college students about the perils of signing up for all those relatively easy-to-obtain college loans out there. If so, pardon my seeming obsession about this.

But college is expensive, sometimes exceedingly so. How you handle that expense can have a huge influence on how you live your post-college years, maybe even decades. In that light, then, let’s take a deeper look at some facts about student loan debt and discover some details you may not have known.


First of all, consider how much money college students owe back to their lenders: $1.5 trillion. Note the “t” in trillion. It’s not a “b,” as in billion. Years ago, we may have had a hard time understanding what a billion dollars represented. Simply put, a billion dollars is a thousand million dollars. Wrap your mind around that!

Now, let’s stretch our imaginations and contemplate a trillion dollars. A trillion dollars is a thousand billion dollars. It looks like this: $1,000,000,000,000,000. Got that? Maybe not. It’s hard to grasp. For an excellent graphical understanding of what one trillion dollars looks like, check out this neat explanation. It’s almost beyond imagination.

Okay. Now that we’ve stretched our brains to the breaking point, keep in mind that the total student loan debt in the US isn’t just one trillion dollars. It’s $1.5 trillion. So, increase that trillion-dollar figure in the previous paragraph by 50 percent, if you can. When I try to do that, my brain warns me that it’s about to pop.

That’s the baseline. That’s how much current and past college students owe their various lending institutions in return for being able to pursue higher education.

I wanted to dig deeper to find out more details about all this debt, so I found several sources of information that spell out what I needed to know. I’d like to share some of that information with you here today.

Do Women Carry More Debt?

First, some highlights from this CNN Money articleStudent loan debt just hit $1.5 trillion. Women hold most of it:

- Women hold nearly two-thirds of all student debt in the US, according to a report from the American Association of University Women, a group that advocates for equity and education for women and girls.

- More women take out loans, and when they do, they borrow more money. The average woman owes $2,740 more than a man upon finishing a bachelor's degree … Women are also repaying their debt more slowly, which can mean they're paying more in interest over time.

- 42 percent of people who've gone to college took out debt. A majority of them took out student loans, but 30 percent had some other form of debt, like credit card debt or a home equity line of credit, according to a Federal Reserve report based on a 2017 survey.

- The average new grad owes $28,400. Among those who finished a bachelor's degree in 2016 with debt, the average amount was $28,400, according to The College Board. That's up from $22,100 in 2001 … It does not include those who went to a for-profit college.

- 20 percent of borrowers are behind on payments. Those who never finished their degrees are more likely to have trouble keeping up with their payments, the Federal Reserve report said.  Just 11 percent of those who completed a bachelor's degree were behind and 5 percent of those who had a graduate degree had fallen behind on payments.

These are interesting facts. Women carry the larger share of student loan debt and are taking longer to pay it back. Also, almost a third of all those carrying student loans are strapped with additional debt, compounding the apparent weight of their student loans, which may contribute to that fifth of borrowers who are in arrears.

Now, let’s focus on those women who have student loans. In another statistically illuminating article from the AAUW (American Association of University Women), Women’s Student Debt Crisis in the United States, we get some greater resolution about females and their student loan status. Note that although the article’s number cited for total student loan debt is $1.4 trillion, not the $1.5 trillion posted by CNN, don’t be concerned by the “small” difference. The key points are still illuminating … and sobering:

- Right now about 44 million borrowers in the United States hold about $1.4 trillion in outstanding student loans. … Yet despite the fact that women represented 56 percent of those enrolled in American colleges and universities in fall 2016, many people do not think of student debt as a women’s issue.

- This report reveals that women also take on larger student loans than do men. And because of the gender pay gap, they have less disposable income with which to repay their loans after graduation, requiring more time to pay back their student debt than do men.

- As a result, women hold nearly two-thirds of the outstanding student debt in the United States — almost $900 billion as of mid-2018.

These are staggering numbers. The real danger, however, lies in not finishing college, once you’ve started and signed up for loans. The reports emphasizes this:

- The struggles of college graduates with student debt can be significant, but students who leave college without completing their academic program are more than twice as likely as graduates to default on their student loans. While these borrowers may have debt amounts that are small in absolute terms, their precarious economic position without a certificate or degree to improve their prospects in the labor market means that they may be unable to repay those loans. More than half of student debt defaults are on loan amounts of less than $10,000.

Which leads to a third article from US News that reinforces the perils of dropping out of college with student loans in tow: Student Loan Expectations: Myth vs. Reality. It gets right to the perilous point:

“About half of current students said student loan debt is making them reconsider finishing college.”

Even though this article is a few years old, I’m citing it because it reinforces the premise that I keep preaching here in Admit This! That premise is, to quote the US News text:

YOU THINK YOU KNOW, BUT you have no idea – this is the true story of student loans.

Current students know they'll likely borrow a large amount of money to finance their education, but they appear to be disconnected from the reality of how long it will take to pay off the loans, according to a new survey from Citizens Financial Group. ...

… The standard repayment plan for federal student loans puts borrowers on a 10-year track to pay off their debt, but research has shown the average bachelor's degree holder takes 21 years to pay off his or her loans. Under federal income-based repayment options, remaining debt is forgiven after 20 years.

Twenty-one years! Over two decades of debt. That’s just student loan debt. Forget about your car loan debt, credit card debt and maybe even mortgage loan debt.

Don't Let Emotion Cloud Financial Decisions

As the lead from the US News article states, “you have no idea.” That’s why student loans can be so seductive and destructive. The scenario usually includes highly subjective emotions upon being accepted at college. That college may be more than just any college; it may be your “dream” college. Euphoria flows freely.

Then the financial aid package arrives and it includes a quite healthy dose of loans. But -- and this is where euphoria, or at least a lack of objectivity, sets in. You may understand that you’re being required to enter significant debt, but you steadfastly proclaim, “Whatever it takes!” and sign on the dotted line.

If I could leave you with one thought about going to college using student loans, it would be this, repeating the key part of that sentence from the US News report above:

“... research has shown the average bachelor's degree holder takes 21 years to pay off his or her loans.”

One of the negative consequences of carrying a high level of student loan debt is its potential impact on our ability to acquire other essentials, such as cars, homes and other large items such as furniture and appliances. Being behind on loan payments almost always negatively affects credit ratings, which in turn affects our ability to buy what we want or need through installment payments.

Bottom line: The decisions you make about paying for college can have long-term effects on both your finances and quality of life. That’s the unfortunate reality of higher education today.