Infographic: The future of student loan debt in America
Ivan Serrano / June 1, 2015
Over the past 30 years, college tuition has increased a whopping 500 percent and now more than 37 million Americans owe a total of $1.2 trillion in student loans with that number expected to reach $2 trillion by 2025 if current borrowing patterns continue. This amount surpasses every other household debt besides a mortgage. Is it any surprise then that these indebted graduates are taking longer to achieve certain milestones in their life such as buying a house and starting a family? It’s estimated that the total lifetime wealth loss for all indebted graduates is around $4 trillion. This amount isn’t just the borrowings plus the interest payment. It’s the overall effect paying these loans have on young adults. While college graduates are busy paying their loans, it means they cannot put money towards a savings account, retirement or making large purchases such as a house or car.
The overall loss of lifetime wealth doesn’t just affect the individual; it affects the economy as whole. Without a household, the new generation will be less likely to make other home-based purchases such as furniture and appliances thus decreasing overall purchasing power. As well, the rising student debt will affect future generations. Since the current generation are not able to save as much, their children will likely suffer even greater student debt once they reach college age. And in fact, this is already happening as parents now are only able to fund 27 percent of the child’s college expenses versus 36 percent in 2010.
Although there has been some movement towards making the repayment of student loans less of a burden on graduates, the actual cost of college does not appear to be decreasing any time in the future. The embedded infographic will provide more information on the state of student loan debt today, for the future and its overall worth. While technically a college degree might provide you with a better paying salary now, the question is whether it will continue to be worth the cost in the future.