The Student Debt Squeeze
May 21, 2014
Posted by on
Student debt is a major and growing problem for young people, their families, and our economy. Despite the fact that everyone knows this, it keeps getting worse.
According to the Wall Street Journal, the class of 2014 will be the most indebted class ever:
The average Class of 2014 graduate with student-loan debt has to pay back some $33,000, according to an analysis of government data by Mark Kantrowitz, publisher at student-marketing company Edvisors. Even after adjusting for inflation that’s nearly double the amount borrowers had to pay back 20 years ago. . . .
The good news for the Class of 2014 is that they likely won’t hold the title of “Most Indebted Ever” very long. Just as they took it over from the Class of 2013, the Class of 2015 will probably take it from them.
Not only is the average debt for graduates that borrowed money growing in real terms, the percentage of graduates with debt is also growing. More than 70% of this year’s bachelor’s degree recipients will graduate with student loans. In 1994, it was less than 50%.
And what makes it all such a crisis for those affected, is that:
earnings and debt aren’t moving in the same direction. From 2005 to 2012, average student loan debt has jumped 35%, adjusting for inflation, while the median salary has actually dropped by 2.2%.
Phil Izzo, the author of the Wall Street Journal article, comments that if things don’t change, “debt burdens could start to become more unwieldy.” I think unwieldy might be the wrong word. More optimistically, it might help fuel a movement of young and not so young workers to become more active in transforming our system. The burgeoning fight for “15 dollars and a union” is a hopeful sign.