Why Student Loan Debt Is Out Of Hand

 

ThincSocial.com

Let me start by saying myself, my sister, most of my friends, and even some of my other family members are in the same boat on this subject. Right now the average 4 year public college/university debt in Massachusetts (Where I live) is $29,391, and the school that I go to has 81% of graduates graduate with debt*. Right when you get out of school you already have almost $30k in debt, over 10 years and a 5% interest rate means $3,150 in repayments, or $263 a month for the next 10 years.untitled-infographic

If those numbers already gave you a headache, then good because you’re reading this and now start to realize how crippling this debt is becoming and it will only get worse. I myself am a Finance major so I will be seeing a lot more of those numbers over the course of my lifetime because everyone will be analyzing and waiting for the student debt bubble to burst.

It is called a bubble because certain people are affected and if it bursts, everyone including those outside of it are affected. The problem is in large part the Government. Since most public Universities are funded through taxes and fees, a schools tuition rises when taxes go up. This will cause a two fold outcome:

  1. More people my age and younger either will not pursue college at all, or choose to not add more to their personal debt by going for a Masters or Ph. D.
  2. People will default left and right because of this now additional expense has gotten so high.

As a society and Americans we pride ourselves on being THE best. That will fall off if more people around the world are either obtaining higher degrees elsewhere, or if Americans altogether cannot afford to get some type of degree. The Government can do something by not adding interest to Govt loans, and overall decrease the cost of going to a public 4 year University/College. It makes sense how private colleges and Universities increase costs because you chose to go there and most likely have the money to do so. But when a PUBLIC school raises costs, it affects the kids and adults who go there a lot more.

college-debt
Photo: cbsnews.com

Now it is not impossible to say that obtaining and  repaying your student loans is not impossible, as it is in most cases where you have 10 years to pay back. But the interest accruing should not be necessary for the U.S. Government. Think about it, the Government charges you to go to school while you pay taxes at your part-time (Or full-time) job to help pay off those interest charges. Double whammy on you.

For a great online calculator to show what your annual income needs to be in order to pay off the amount of loans you have: https://mappingyourfuture.org/paying/debtwizard/index.cfm

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

*Numbers based on 2014 stats from http://ticas.org/posd/map-state-data-2015#overlay=posd/state_data/2015/ma

Other sources: http://www.cnbc.com/2015/06/15/the-high-economic-and-social-costs-of-student-loan-debt.html

Infographic By: Thinc Social

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