Straitened circumstances are becoming more familiar to those in their 20s and 30s as they try to get a foothold on the American Dream. Student loans, depressed wages, rising healthcare costs, and soaring housing prices are creating new economic realities. Sixty percent of young adults between 18 and 34 are struggling for financial independence, says Draut, now the director of the economic opportunity program at Demos, a think tank in New York. She is also the author of a new book, "Strapped: Why America's 20- and 30-Somethings Can't Get Ahead."
The financial situation of "20somethings" is the end result of 20 years of changing higher education tuition policy. While some student debt can be an incentive to students to not only study but become productive members of society, too much debt can prevent these same people from becoming independent members of society.
This is not a new problem:
Over the past two decades, changes in state funding, tuition and financial aid have made postsecondary affordability a growing problem. While the average cost of college tuition has risen by 110% over the past 20 years, median family income has risen by only 27%.
The cost of college education has increased at a high rate over the last 4 years. For the academic years 01-02, 02-03, 03-04 and 04-05, tuition and fees increase 7.1%, 9.1%, 13.9% and 10.6%, respectively. Over the same years, room and board increase 6.1%, 5.4%, 6% and 4.8%. Both sets of increases are faster than inflation; in the case of tuition and fees, the increase is as high as 3 times average annual inflation.
The primary reason for tuition increases is a drop in state funding. Whenever state government drops its respective contribution to the state university, the university makes up for the revenue shortfall by increasing tuition and other fees.
According to the Congressional Budget Office:
The cost of four years of undergraduate education, including living expenses, now averages nearly $80,000 at public colleges and over $100,000 at many private institutions.
Loans comprise 55% of total student aid. This means the average 4-year graduate enters the workforce with at least $40,000 in college debt.
So, where does all of this lead? To a disheartened 20something:
Michelle Wingate, who is in her mid-20s, holds an entry-level position at a public relations firm in Raleigh, N.C. She is paying off student loans. "When you graduate from college, you think, 'This is great. I'm going to be able to pay off all my debts,' " she says. "That's just not the case. My salary looks good from afar, but once I get my money I'm sending it directly to the people I owe it to. That creates a whole other problem. When you owe money, you can't save it."