Living at home, giving up dreams, working second jobs — the real cost of student loan debt to young adults, society

To paraphrase Stalin, $1 trillion is a statistic; an unemployed student loan borrower with a $900 monthly payment is a tragedy.

It’s almost graduation season, which means it will soon be time to reveal how special, and record-setting, this year’s college graduates are.  Setting records for debt, I mean.

Six years ago, a nearly unthinkable line was crossed: Americans’ total outstanding student loan debt surpassed total credit card debt. The nation’s student loan burden has only ballooned more since, and it’s now 1.5 times the size of credit card debt.  In one decade, America’s unpaid bill for higher education grew from $600 million to $1.2 trillion, and it now exceeds total auto loan debt, too. Only Americans’ mortgage debt is larger.

College grads from 2015 left school owing an average of $35,000, a record. But even that figure hardly tells the real story.   Students who go on to graduate school often up end with even bleaker balance sheets.  One-quarter of all grad degree earners had borrowed more than $100,000, according to a paper published last year by the New America Education Policy Program. One in 10 borrowed more than $150,000. Try to repay that in the recommended 10 years and you’d end up with monthly payments of $1,750, assuming a modest 6.8 percent interest rate.  Most opt for 20 or even 30 year terms, making it entirely possible that today’s students will be still be paying for their own college tuition when the first bill comes for their kids’ college tuition.

What does a debt burden like that do to a young adult just starting out?

The folks at Acorn’s Grow online magazine recently released an excellent series called “The Faces of Student Loan Debt.”  As part of the project, they asked me to explore the real-life cost of student loans — to young adults, and to our society at large. You can read the full piece over at Grow.Acorns.com.  But here’s a brief list of consequences for students:

• They live with their parents, into their 30s. More 25-34 year olds are still in the nest than at any time since the Census Bureau started counting in 1960. This hurts their parents too — they put money into their adult children’s lives that the should be saving for retirement.
• That also means they aren’t buying starter homes; so people in starter homes have a harder time trading up
• They put off marriage and kids.
• Their credit takes a hit.
• They aren’t forming startups.
• They aren’t following their passion. They aren’t saving for retirement.
• They are working second jobs, however. The highly indebted are about 50 percent more likely to hold down more than one job (33.0% of debtors vs. 23.4% of non-debtors, according to one research paper.)

Keep reading the series, or my story, at Grow.

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