Student Loan Debt Restrains The Economy
There has been spate of national media reporting about the broad, negative impact of US student loan debt on the US economy - - examples, here and here - - and original research by One Wisconsin Institute has made a major contribution to the discussion:
To say the Institute’s campaign on student loan debt has started with a bang is an understatement to say the least. The results of a comprehensive report on student loan debt, homeownership and automobile purchasing were the lead story in the state’s largest newspaper.The Journal Sentinel noted some of the student loan burden in Wisconsin, as compiled by the Institute:
Individuals with bachelor degrees with student loan debt were making average monthly payments of $350 on loans with an average term of nearly 19 years...(Disclosure: I am on the Institute board.)
For those with advanced degrees, monthly student loan payments averaged $448, with an average term of 22 years.
Over $200 million in annual new car sales are lost as a direct result of student loan debt and households with student loan debt are significantly more likely to rent rather than own their home...
7 comments:
Not to worry. Quantitative Easing will fix everything; unless you're on a fixed income.
The rise of student debt makes sense as people work to upgrade skills during the major recession we just had. However the cost of school is outrageous. It had become a form of indentured servitude. Wages have been dropping and many skills go to waste because the economy really can't accommodate it. I know many talented smart people with college degrees doing menial jobs because well, that's all there is. This will eventually crush the economy for middle class people and we all better be concerned about it. Seriously, who do you expect to buy our houses? Certainly not people with massive student debt being paid off with pathetically low wages.
Student loan debt may also explain Wisconsin's brain drain as college grads look for jobs in cities with mass transit, such as, Chicago and the Twin Cities. Mass transit and the fact that there are jobs in Chicago and the TwinCities.
How smart are students graduating with massive debt?
Is a potential employer going to view the graduate candidate as a skilled asset or a questionable liability if they can't handle their own personal finance?
The # 1 requirement to graduate from H.S. must be a class in personal finance. Bad parenting hasn't helped. Unfortunately this has only been a talking point for decades and is only an elective in most high schools.
@Amonymous @ 12:28 pm. Apparently you are new to this country. Most employers wont even look at your resume without a college degree. Unless you are a burger flipper, which you probably are, every job remotely worth taking has college requirements. Not everyone has a silver spoon jammed in their mouth.
How smart are students graduating with massive debt?
Do you have any idea what a college education costs?
The days of 'working your way through college' are gone. Unless you come from a wealthy family, some combination of loans is necessary.
Anon 3:23
No I'm not new to this country and I make 70k+ good benefits because I work with my hands for a living in a highly skilled trade. I guess for some people that's a job not remotely worth taking. Although most of the apprentice applicants I've seen over the last decade have a college degree but they don't know what a level is. I don't know what college debt is.
Other than on my grill, I've never flipped a burger but I've worked in a hardware store and at a Pick N Save stocking for extra money. My parents were blue collar too.
The problem with your generation is that they have a warped sense of what college really is - a business. A business with excellent marketing. The glossy brochures and oversold career descriptions glamorized many a glossy eyed youth into disappointment and debt upon graduation.
Here's the truth - there's no such thing as the perfect job.
Yes Zombie, I do know. I cut a deal with my children when in H.S. that I'd pay half of their college tuition if they should choose to do so. If they got scholarships, it counted toward their half. My son graduated debt free and in 3 1/2 years and will finish his MBA (while working full time as a manager)in the next 2 years. My daughter is pursuing a PhD.
We're not a wealthy family, we tend to live conservatively, let Jesus guide our lives, and invest in our children. Works for us.
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