Approximately two-thirds of all students use loans to pay for their higher education, according to the Center for Economic and Policy Research. The average debt is $15,500 for public schools and $24,600 for private - many students rack up even more on their credit cards.
Call it a reverse dowry: college debt diverts careers and delays or impedes graduates' plans to get married, buy a home or even to start a family. The effects can last years.
A 22-year old student graduating this year who consolidates their $40,000 loan at 6.125 percent will need to pay $243 a month...until they're 52. By that time, they will have paid $47,494 in interest alone.
A degree is essential to today's job market. This expansion's dominant areas of job creation (about 80%) are professional, medical educational and financial. Or, to put it another way, today's college degree (or higher) is yesterday's high school diploma. But because of the US's backwards methodology of financing college education, students now graduate with enough debt to hinder their socio-economic upward mobility.
For the last 15 years state legislators continually cut back of higher education funding. Between 1988 and 1998, the average annual state-sponsored school tuition increase was 4.1%. Over the same period, state appropriations -- which comprise 33.4% of total state school revenues -- decreased 1% annually. As a result, tuition as a percentage of total state school revenue increased from 22.7% to 31.1% from 1988 - 1998. In other words, the cost of state education is falling more and more on students as opposed to the state governments.
Since 1998, college tuition costs have continued escalating out of control, making college a less affordable proposition for students. The year-over-year percent increases for 2001-2005 were 7.1%, 9.7%, 13.9% and 10.6%, respectively. Over this same time, state appropriation increased at a 4.6% between 2001-2002, decreased 1%, and 2.3% between 2003-2003 and 2003-2004 and increased 3.8% between 2004-2005. Finally, average inflation adjusted wages according to the Bureau of Labor Statistics grew .42%, 1.52%, -.59% and-.31% respectively for 2001-2004. In other words, the trend established in the late 1980s and early 1990s of decreasing state funding and increasing tuition to pay for state schools has continued. States have increasingly passed the cost of higher education onto student's backs.
In addition, consider this:
While the average cost of college tuition rose by 110% between 1981 and 2001, median family income rose by only 27% during that period. (The College Board, Trends in College Pricing, 2001).
The cost of the "ticket to a better life" has outstripped income growth by a wide margin. As a result, the better life is slowly moving out of reach of a large portion of the population.
The cumulative effect of such student debt on graduates is unclear, although few would argue that its impact will be positive for the graduates, the economy or society.
"We've never done this to a generation of young people before," said Dr. Heather Boushey, Senior Economist at the progressive Center for Economic and Policy Research. "We've never put a generation in their 20s in debt they can't get out of before they started their work life."
"The normal approach in any healthy society is to help young married couples get started in life through marital gifts, dowries, and the like," Allan Carlson of the socially-conservative Howard Center for Family, Religion, and Society said.
"We now burden many young adults with student debt, sometimes massive in nature; the price being paid includes marriages delayed or foregone and fewer children. This is foolish public policy."
There is a book out called Generation Debt. I have not read it, but I can pretty much tell you what that book says given the above statistics: college graduates are now indentured servants to their respective college financing.