Over the past ten years, tuition at private, nonprofit, four-year colleges has risen 60 percent. It only gets worse at public four-year colleges; the average cost here over the past 10 years has risen 104 percent. The overall price for a college education for the 2012-13 school year rose to an all-time high: on average, in-state public college tuition costs $22,261.
These rising costs, paired with a floundering economy, high new graduate unemployment rates, and increased costs of living all spell one thing for the average student: debt, and plenty of it.
Three quarters of graduates leave college with $25,000 worth of debt. 16.5 percent have close to $50,000 in debt. The numbers continue to escalate, until you come to the uppermost bracket: 2 percent of borrowers with $150,000 or more in student loans debt.
It's not just students who are taking on these debts, either. Parent borrowing is up 75 percent in the last seven years, with each family taking on an average of $34,000 in loans per child, according to a 2012 study by the National Association of Bankruptcy Attorneys.
With all of these debts, families and new graduates are having to allot major portions of their salaries to make monthly payments. It's recommended that you take out no more in student loans that you will make in the first year of employment. Given that the average new graduate makes $44,259, that means that a full quarter of students have taken on an overwhelming amount of debt.
It's possible that they will manage to make those payments, cutting down on cost of living in myriad ways to save money. It's also possible, though, that they will follow the new trend: delinquent payments.
Delinquent, or late, payments are becoming the new normal. Student loans taken out after October 2010 have a delinquency rate of 15.1 percent, a 22 percent increase over the last five years, according to a recent FICO study. On average, these payments are more than 90 days late, indicating that this delinquency may soon turn into bankruptcy.
Delinquency has an adverse affect on credit scores, which are crucial to receive other loans, make big-ticket purchases like cars or homes, or start businesses. Graduates' inability to pay now will affect their future, as well as that of the entire economy. While the full effect of these loans has yet to be felt, the magnitude of the problem will only increase as average student debt continues to rise.
Ashley Astolfi
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