The mean and median levels of education debt burdening young families (those with heads of household younger than 40) have risen precipitously this century. Nearly 4 in 10 young families in America are saddled with education debt, up from a little more than 2 in 10 in 2001.
The ever-increasing debt burdens are hitting lower-income families the hardest. Nearly a quarter of young families’ student debt is held by those making less than $30,000.
The mean repayment term for student debt is 13 years, considerably longer than terms for other consumer debt.
These data and more can be gleaned from an excellent article published by The Federal Reserve, titled Changes in U.S. Family Finances from 2010 to 2013: Evidence from the Survey of Consumer Finances.
I don’t know what to say that hasn’t already been said. A higher education system that saddles people with debt into their middle-aged years and beyond (a rising number of people are having their social security benefits garnished) is deeply flawed. It reflects really bad public policy and really bad decisions on the part of many of the boards and administrators responsible for our institutions of higher education.
It’s hard to believe such a system is sustainable. Yet the system seems to be banking on it. I suppose only time will tell.
Some, like renowned Harvard professor Clay Christensen, continue to maintain that about half of all universities will go bankrupt over the next 15 years. It strikes me Christensen’s prediction is overly bleak. But perhaps not.
Predictions notwithstanding, it’s clear (at least to me) that one of the reasons for our stagnant economy is the heavy weight of education debt. It’s equally clear that many people are taking on more debt than is wise given the current labor market.
There are ways to minimize education debt, many of which have been the subject of prior posts here, including:
- taking your first two years at a community college,
- steering clear of colleges that don’t offer enough sections to graduate on time or that have a lax attitude toward timely completion and student debt,
- favoring colleges with high four-year graduation rates,
- avoiding colleges that produce graduates with high student debt balances,
- using student loans for tuition and books only and not for other expenses, and
- choosing a college and major with strong job-placement records.
Despite the flaws in our system, the savvy student can earn a degree without excessive debt. That’s the good news. The bad news is that it’s getting harder and harder to pull it off.
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