Student loans are no secret to many young adults who have either graduated or are still attending college. Each year students and the nation witness a rise in higher education-related debt, and this trend does not appear to be stopping anytime soon, considering that the average student loan debt at graduation has been steadily increasing.
The most recent data involving student loans shows roughly a 10.0% increase in overall debt; this puts the new current student loan debt at $1.36 trillion which is up from $1.23 trillion from the previous academic year. To put this in perspective, student loan debt – both federal and private – has been growing by roughly $3,000 every second, and this rate is continuing.
There has been a high demand for obtaining college degrees that led to an increase in college attendance; this increase in attendance coincides with an increase in student loans. As a result, seven out of ten college graduates leave school with student loan debt which amounts to approximately 40 million Americans. Out of these borrowers, less than 40% are paying back their students loans.
As a consequence, those forced to take out student loans are in a much bigger debt pinch then those without the same initial burdens. According to a study from the Federal Reserve Bank of New York, borrowers of student loans had over $15,000 more in debt compared to non-borrowers just in 2012. This gap has only increased based on the previous data mentioned.
With so many people burden by student loans, it is only natural that these people make sacrifices in other areas of debt, namely mortgages and auto payments. While this can be assumed, these sacrifices have already been seen in the younger population from previous studies. In 2012, only 30% of individuals with student loans at the age of 25 had any sort of automobile debt (Federal Reserve Bank of New York) which was down 10% from the previous four years. In addition to auto loans, only 23% of borrowers had a mortgage on a home in 2012 compared to 34% in 2008.
These are old trends, but they are correlated with rising student loan debt. The last four years has only seen increases in student loans overall; from last year, the debt rose considerably. In fact, the toll is second only to mortgage debt and has eclipsed auto loans and credit card debt considerably.
These trends catch the attention of many who call for solutions to this issue. These solutions can be found in various ways such as student loan refinancing or consolidation, and more are sure to come.