Meet the class of 2013, the most indebted yet
This year's grads are leaving college carrying the largest loan burden in US history. Welcome to Generation Debt.
Thousands of 20-somethings will receive freshly minted diplomas this month as they trot across the stages of their colleges and universities and their proud families look on. But for many, the diploma has a downside, given that the class of 2013 is entering professional life as the most indebted grads ever.
Call it Generation Debt.
The average student loan debt for a borrower receiving a bachelor's degree in 2013 reached a record $30,000, according to an analysis of government data by Mark Kantrowitz, a publisher at Edvisors, and as cited by The Wall Street Journal.
The average debt load has mushroomed. Even adjusted for inflation, students graduated with half that debt load just 20 years ago, the paper notes.
At least one estimate is benchmarking this year's debt level at an even higher amount. Fidelity said a recent poll found 70% of this year's graduating class has average college-related debt of $35,200.
The rising cost of a college education is getting increasing scrutiny from parents and lawmakers.
Given that the country has more than $1 trillion in student loan debt, some see the burden of repayment as a damper on the economy. For instance, a 20-something paying off a hefty college loan has that much less to put toward buying a home or a car. That could spell bad news for companies such as mortgage lenders like Wells Fargo (WFC) and automakers like Ford (F).
Sen. Elizabeth Warren, D.-Mass., earlier this month proposed giving students a break by allowing them to pay the same rock-bottom interest rates the Federal Reserve charges banks. Right now, grads pay 3.4% on federally subsidized Stafford loans.
Because of that higher rate, the federal government is set to earn a profit of more than $110 billion over the next four years.
At least students with a diploma are more likely to be employed and earn more than those without degrees, which should help many pay off those record loans. The unemployment rate for college grads over age 25 was 3.9% in April, well below the 7.4% rate for those with only high school diplomas, according to the Bureau of Labor Statistics.
College grads earn an average of $1,066 a week, compared with $652 per week for those high-school-only grads, the agency reports.
Yet with no interest rate relief in sight and tuition continuing to rise at many colleges, it's likely 2013's grads may hold the title of most indebted class only until the class of 2014 walks across the stage next year.
Follow Aimee Picchi on Twitter at @aimeepicchi.
I certainly agree that the price of a college education is high....much too high. To many high school graduates simply 1) do not plan for their educations, 2)do not consider the relatively low cost of Community College, and 3) do not realize that all of this 'free' money will need to be paid back at some point. Usually there are jobs on campus for students to apply for and work. (What a concept...work!) Now, instead of buying a home, buying a car....these students have college loans. We have not taught our children well!
College debt is slavery. The government has been pushing student debt for over 30 years. It must stop. Once you could work a part time job and summers and pay for college (I did in 1968-72). They were pushing loans back then too, I avoided them because I was taught at home the evils of debt. A college kid has no concept of what it will take to pay back $ 35,000. It takes slavery. We must break our dependence of government. The colleges are growing fat and inefficient. They would have to charge a lot less if there were no government guaranteed loans.
But even worse this disaster movie does not end well. All those graduates with liberal arts degrees, gender studies, philosophy and other low paying or no job degrees will default and cause the next economic crisis. Even Doctors who often graduate with over a $ 100,000 in debt find that the government controls so much of medicine that they are slaves too and they will find it difficult to repay. How about the vast number of kids who are talked into college and are not equipped to earn a degree and flunk out, colleges recruit these kids saddle them with debt and then they have no degree and are slaves without reward. Flee the evil of college debt. Get a job in a field you like and work hard at a low wage until you learn enough through experience to demand a higher wage. Oh, I forgot the government will not allow an 18 year old to work for cheap- it is the minimum wage trap. How did welders learn their trade in 1968- they worked for a welder and got taught on the job. I did this on a summer job. Every chance I got I was striking an arc and making a mess until I learned to weld. Now a kid borrows money and goes to a Tec School and takes a bunch of courses he will never need at work so the school can expand their curriculum. Disgusting. REJECT LOANS, FIGHT THE MINIMUM WAGE.
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