I have no doubt this article was simply to advocate free college for everyone, but, it’s actually a worthwhile read for rational thinkers, even though the title is entirely misleading.
Well, it doesn’t actually tell us why student debt is worsening. It simply shows that it is.
WASHINGTON (AP) — America’s $1.2 trillion in student debt is having consequences in far-reaching ways.
Ya think? Really? Say it isn’t so!!!
College dropouts and students who borrowed to attend for-profit colleges are at risk of default. Many Generation X parents — ages 35 to 50 — are still repaying their debt even as their children prepare to enter college and begin a second generation of family debt. Some millennials are delaying marriage and home ownership until their loans become less burdensome.
Three trends show how the pressures from student debt are compounding:
— FALLING INCOMES
For people with college degrees but no graduate school education, incomes, after accounting for inflation, have declined, thereby reducing their ability to repay their loans. For a 23-to-29-year-old with a college degree, median income in 2013 was $41,000. That figure has plunged more than $5,000 in current dollars since 2000, according to Georgetown University’s Center on Education and the Workforce. The drop reflects a trend dating to 1970 of stagnant income for the college educated with no graduate degree — evidence that the supply of these workers has roughly matched employer demand.
Errr……. wat!?!?!?!?! The annual income for college grads has dropped by $5,000/yr since 2000. It hasn’t roughly matched employer demand!!!! It has exceeded the demand and significantly so!
Median incomes have risen consistently for one group since 1970: Workers older than 30 with graduate degrees. But even those gains began stalling before the Great Recession began in late 2007.
— MORE BORROWING
A typical member of the class of 2013 graduated owing $27,300, according to the College Board. This figure has risen $5,000 in current dollars since 2000, a 22 percent jump. College grads who go straight into master’s programs often owe a combined $70,000 by the time they leave. Debt averaged $41,400 for a master’s degree, $71,600 for a research doctorate and $128,600 for a professional doctorate in medicine or law, according to exclusive Education Department data analyzed for The Associated Press.
— LESS SPENDING ELSEWHERE
When incomes fail to rise, every additional dollar in debt comes at a cost: A delay in major purchases, such as cars or homes. This can slow the economy because consumer spending drives about 70 percent of U.S. economic activity.
Ya think?!?!?!?!?!?!?! So, let me get this straight …… if you don’t increase your income, but, borrow more, you have less money to spend on other things?!?!?!?!??!?!??!?!? Well, why didn’t anyone tell us this?!?!?!?!?!?!?!?!?!?!!?
In 2013, college-educated heads of households under age 40 owed $4,850 in annual student loan payments, the Federal Reserve Survey of Consumer Finances shows. The figure has shot up by $1,090 since 2001 after adjusting for inflation.
The surge in student debt has corresponded with reduced spending in other categories. Auto loan payments fell by nearly half from 2001 to 2013. Mortgage payments have also dipped, in part because of the housing bubble and a lack of affordability in cities with many recent college graduates.
Surveys show that student debt increasingly monopolizes family budgets. The average yearly grocery budget was $4,719 in 2013 — $130 less than what the Fed said college-educated households owed in loans.
Let’s see ….. after food and student debt, we’re up to ~ $10,000/yr. Depending upon where you live, $12,000/yr for rent isn’t unreasonable. Indeed, in some places, which would be the only places to apply some people’s education, that would be a bargain. Now buy a car ….. pay your utilities …. buy some clothes.
Today, in many places in the US, it doesn’t pay to go to college. I know a lady, a smart gal, with a business degree from a fine and reputable 4 yr college. She works as a billing clerk. She actually get paid well, for a billing clerk, but, it doesn’t have much to do with her education, but, rather, what the company decided to pay for said position.
When you read this article, it may occur to some people that one must then, pursue a master’s degree. Some should. Most should not. You have to ask the question, ‘how many master degree holders do we need?’
The best advice I can give young people today …… go to work. Find a job which pays adequately. Scrimp and save. Buy a house. Then pursue some advanced education. It currently doesn’t pay. And, you end up working for people less educated, but, with more experience and expertise in the vocation you choose, anyway.