By the end of the 2nd quarter in 2017 Americans owed approximately $1.3 trillion in student loans. This is a two and a half times increase compared to a decade ago. The rise in the debt level comes at a time when more young adults attend college than at any other time in U.S. history and the cost of higher education continues to increase.
Pew Research Center analyzed data from the Survey of Household Economics and Decision making done by the Federal Reserve in 2016 and came up with the following facts about student loans in America:
1. About two in five adults under the age of 30 have student loan debt
37% of adults aged between 18-29 say that they still have their own outstanding student loan debts. Among the older age group, one in five adults (22%) aged 30-44 years still have student loan debt and it is less common in the older age group with 4% in the 45 and older age bracket.
While the age difference is a factor in the difference since they have had more time to repay the loan, it is also true that young adults today are more likely to take out a loan than in the past to pay for their education.
2. The amount of student debt owed varies especially by degree
In 2016 the median borrower with unpaid student loans owed $17,000 for their own education. This figure, however, varies considerably. A quarter of debtors owed $7,000 or less while another quarter owed in excess of $43,000. The education attained explains this variation. People with bachelor’s degree owed a median of $27,000 while those with less than a bachelor owed $10,000.
3. Fresh college graduates with outstanding student loans are more likely to require a second job and to struggle financially
Roughly 1 in 5 (22%) employed adults between 25 and 39 years possessing at least a bachelors degree and unpaid student loans have more than one job. People without student loans are half as likely (11%) to have multiple jobs.
Regarding their personal financial situation, 27% of college graduates with student loans report living comfortably compared to 45% of fresh graduates who do not have any outstanding student loans.
4. Only half of students with loans think that their bachelors degree will outweigh the cost of their education
Only around 51% of students between 25-39 years consider the lifetime financial benefits they will accrue from their degree will outweigh the cost. By comparison, 69% of those without student loans think that their degree will outweigh the costs.
For many young adults, student loans are the only way to attain higher education. This decision to borrow money to attend college only pays off if the education obtained leads to high lifetime earnings.
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