In an interesting online piece from The Atlantic, Jacob Weissmann paints the contours on the next great crisis: student debt.
Why worry? Total outstanding student debt approaches $1 trillion, more than even consumer credit card debt. Last year, student debt grew by $870 billion. The average graduate leaves college with about $13,000 in debt. Debt acts as a tax on future income delaying the ability to save and purchase assets.
Most think student debt is concentrated among young people. Not true. Young people under the age of thirty hold about one-third of all student debt. Another third is concentrated among young people 30 to 39. More recently, dramatic shifts in the economy and job markets have made adult borrowers between 35 and 49 the fastest growing category of borrowers.
A bad job market has only exacerbated the student debt problem by sending many adults back to school. Another problem is the nation’s abysmal graduation rate. Less than 60 percent of undergraduates received a bachelor’s degree within six years (The six-year graduation rate in North Carolina mirrors the national figure). In addition, only thirty percent of those seeking an associate’s degree finish within three years.
Despite all these troubles our governments continue to funnel students into four year colleges. If students graduate at all, they are fortunate to get a job in their chosen field of study and at a living wage.
The current crisis screams for a reset on federal financial aid. However, that’s not coming from the Obama administration whose recent proposals suggest expanding financial aid and tying financial aid for colleges to college affordability and value. … Gosh, and it just happens to be an election year. Who would have thought?
Kick the can again? There’s not much road left.