Burden of College Loans on Graduates Grows

Student loans have always been concerns for graduates.  But in a rocky economy, student loans are more than ever laying a heavy burden on post-graduate students, and expect to become even heavier as looming budget cuts lie ahead, including those to Pell grants for low-income students, and rising tuition at public universities.  According to this New York Times article, two-thirds of bachelor’s degree recipients graduated with debt in 2008—compare that to less than half of students who had debt 15 years prior in 1993.  It also states that the average debt of graduating students in 2010 was a whopping $24,000.

Experts expect that this “mounting debt” will have broad implications on adult life for this generation of twentysomethings, and add difficulties to buying a home, starting a family and/or business, and saving up for their own children’s education.  In fact, many predict that this generation of college and graduate students may still be paying off their loans when they are sending their own kids to college. 

The commonality of student loans is rising with the degree of them—student loan debts outpaced American credit card debt for the first time this year, and is expected to keep on growing.  However, student loans are often not feared as much as those credit card bills because, to many, student loans are the “good” kind of debt—the kind that represents an investment in your future. This investment, for most, will guarantee a larger income over their lifetime—an income that will cover the debt.

President Obama and First Lady Michelle Obama were in the same boat once-- each had at least $60,000 of student loans after graduating from Harvard, the President admitted, and their student debts were larger than their mortgage payments and were not paid off until after they were married.  The Obamas have worked to raise awareness of national student debts' and, in 2009, the Obama administration introduced income-based repayment, which "forgives remaining federal student debt for those who pay 15 percent of their income for 25 years — or 10 years, if they work in public service."

"But if the Obamas’ experience highlights the long payback periods for student debt," this article reads, "their careers also underscore the benefits of a top-flight education."  The President, economic advisors, and professors alike hope that the anticipation of heavy student loans won’t discourage young people to push themselves to get to college.  But they also worry about how the rising student loans will impact the economy—and how those who borrow heavily for college and then don’t complete their degrees will fare in this “mother of bad economies.”  With the obscene unemployment rate and the loss of flexibility to move from job to job (which is how income increases over time), student owed-credit will grow but opportunities to earn money with which to pay slip further out of sight. 

Perhaps this “good” debt is now something to be feared.  See the complete article in the link below.