The economic burden of student loan debt

John Cook
John Cook
Feb 26, 2020 · 4 min read

Student loan debt is accelerating so fast that it has become a burden on the U.S. economy. The Federal Reserve Bank of New York said in February of 2017 that student loan debt rose for the 18th consecutive year and that borrowing for higher education has doubled in just eight years. Pathetic.

The average borrower in the college class of 2017 is expected to carry more than $38,000 in student loan debt, which may be accompanied by growing credit card debt, as well as an auto loan and maybe even a mortgage.

The reality of student loan debt

The costs for a higher education are among the fastest-rising costs in American society today. Since 1980, tuition costs at public universities has risen from $2,119 to $9,410, a jump of 344%. Private college tuition is up from $9,500 in 1980 to $32,410 in 2017, a jump of 241%. By comparison, food and electricity costs have risen about 150% and gasoline prices have risen more than 200% over the same period of time.

The sad state of student loan affairs is further compounded many misconceptions. There are nearly as many misconceptions about student loan debt as there are ways to obtain and pay for it. Too often, college students rely on peers for advice on rules on responsibilities. In the process, a lot of half-truths or just plain misinformation is passed along, my favorite is

It’s good debt. It is, if you get a diploma and job. The total amount you take as a loan should not exceed your first-year salary.

This is terrible advice and will accelerate your membership in the a society of educated and broke workers forced to slave away at a job which is void of passion and joy.

Student loan debt and life

The latest studies say that 70% of college graduates leave school with student loan debt that averaged $38,000 in 2017. The impact of this debt is felt in several areas, notably purchasing a home, starting a business, delaying marriage and contributing to retirement accounts.

A 2017 survey of Millennials found that 63% of them owed more than $10,000 in student loan debt and 42% of the women surveyed owed more than $30,000. Home ownership among those under-35 has dropped 21.2% since the housing collapse of 2009.

The burden of student debt is the key factor in young graduates not starting a business and the marriage rate for Millennials is plummeting. A 2016 study showed that 81% of women born in the 1990s had never been married and 38% of women born in the 1980s still haven’t married. Economists say that the Millennials will have to put away twice almost twice as much as their parents for retirement savings to be able to maintain a comfortable lifestyle when they quit working.

The good news is that there is a considerable payoff for those who got the diploma. More jobs require a degree so there should be more opportunities; the starting salary is higher for college graduates and they can expect to make about $1.3 million more over their lifetime than those who didn’t get a degree.


The soaring cost of college is slowing slightly in 2017, but the amount of student loans needed to cover it, is not.

The price of tuition at four-year, in-state universities went up 2.4 percent, the smallest gain since 1975. Borrowing from federal loan sources for the first quarter of 2017 was $136.3 billion, about 3% less than students from the 2016 year borrowed. Per student borrowing was at $5,460 in 2016. The National Center for Education Statistics says that 59.1% of undergraduate students received Scholarships and grants (free money!) to attend college.

That is a positive trend. Sadly, it is dwarfed by negative trends over the last 10 years.

Student loan debt has soared from $260 billion in 2004 to $1.4 trillion in 2017; average debt jumped from $18,650 to $38,000 over that same period; and the number of people over 60 with student loan debt has quadrupled in the last decade from 700,000 to 2.8 million. That group’s share of the debt has skyrocketed from $8 billion to $67 billion and many are having loan payments deducted from their Social Security checks.

This story is published in Educated & Broke — a publication dedicated to helping you fight student loan and consumer debt by providing real-life, practical advice.

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