Student Debt Binge: How Will It End?

This recent Huffington Post headline captured the march of shocking data about our growing societal burden: “12 Student Loan Debt Numbers That Will Blow Your Mind.”

Here’s a sample:

• The student debt balance has hit $1 trillion and is still rising –  it is now exceeded only by mortgage balances, according to the Federal Reserve Bank of New York;
• Student debt is held by 26 percent of households headed by someone between the ages of 35 and 44, and 44 percent of under-35 households, and it’s concentrated in poorer households, according to the Pew Research Center;
• 80 percent of bankruptcy lawyers said student loans were driving more clients through their doors for relief.

It remains unclear where this era of student debt is taking society.  Sure, college graduates will bring in another $1 million in earnings over a lifetime.  But anyone who’s thought about it can’t help worrying this nationwide borrowing binge may end badly.

To help those grappling with how to pay for the fall semester, feeling the emotional fallout of debt, or trying to understand the larger issues, Squared Away pulled together some relevant blog posts published over the past 18 months.

The Issues:

• Blame Aid Policies – Not Tuitions: Parents and high school seniors mulling financial aid packages should know that individual college’s aid packages – not just tuitions and fees – are significant determinants of how much debt students take on and how long they will be burdened with loan payments.
• College Loans: A Punitive System?: With the interest rate on federal student loans set to double on July 1, the system has been criticized as being stacked against young adults fresh out of college.
• Millennials in Debt: Is it a Big Deal?: Payments on half of all student loan accounts are being deferred, a sign that graduates with large loan balances are in a financially precarious position.

The Emotional Impact:

• Women in Debt Less Likely to Marry: Women with large student loan balances are less likely to marry than their girlfriends who graduate debt-free.
• Frustrations of Managing College Loans: Getting the money is definitely the easy part.  Time and again, borrowers eventually learn how difficult it is to manage them and pay them back post-graduation.
• How Can Debt Enhance Self-Esteem?: Oddly, people with more debt have higher self-esteem.  How do student loans figure into this counterintuitive research finding?

Debt Prevention:

• 10 Student Loan Prevention Strategies: These tips aren’t a panacea for student debt, but they may help minimize it.
• Student Loan Prevention Part 2: Students really can’t afford to “just study what’s interesting to you,” one college financial adviser warns students.
• Loan Delinquencies, Need for Help Grows: Click here for resources and help to get started on managing your loans.

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