The unfortunate reality of college loans


The average American has $117,951 in debt. Between mortgage payments, car loans, student loans, credit card debt, medical bills and personal loans, the average household owes more to the bank than the cost of a new Mercedes S-class.

And while some of these are undoubtedly responsible, necessary even, reasons to borrow, one in particular is precipitating on a nationwide crisis: Student loans.

We don’t mean to be alarmists, but if you’re planning on going to college, you might want to sit down for this.

According to the Brookings Institute, a leading researcher on college loans, default rates among students who first took out federal loans in 2004 will reach nearly 40 percent by 2024. That’s not even the worst part. This 40 percent default rate is for students who owe, on average, $20,770 ​less ​than their 2018 counterparts.

Last year, the average college student graduated with approximately $39,400 in debt. This number has increased every year since 2011, and shows no sign of slowing under current conditions.
“But wait wait wait!” your dear Grandfather interjects, “back when I was in school, we worked 80 hours a week to pay for tuition and we ​liked​​ it that way! Kids today are just lazy and entitled!”

Alas, gramps, it’s not that simple.

In 1970, the average cost of college hovered around $358 for a public four-year institution, and around $1,561 for a private four-year institution. Adjusted for inflation, that comes to slightly over $2297.5 and $10,015 for public and private schools in 2018 money, respectively. This wouldn’t be terrible, if the real prices actually reflected inflation. Instead, college prices have risen exponentially faster. Today, the cost of an average private college is actually $34,740, and the average public college is $17,795. That, roughly speaking, is three and half times more expensive than inflation alone would dictate.

This harsh reality leaves even the most hardworking students unable to, realistically, work their way through college. Even seemingly beneficial additions to finance like deferred payment plans can do more harm than good to borrowing students. With a four year grace period before any money is ​actually​ due, many students find themselves unsure of who and how much they actually owe.

Even worse, something as small as a change in email address or phone number can wreak havoc on students accounts, leaving them unable to contact their collection agencies until the bank finds their new address. You can run; shoot, you might even be able to hide for a while, but you definitely can’t hide forever.

Now, this begs the question, is college ​really​ worth the expense? Are the eight to ten years (at minimum!) spent under the heavy weight of debt ​really​ worth a slip of paper that, arguably, serves as nothing more than a glorified certificate of achievement? Well, society would argue yes. Unfortunately, as is often found in today’s climate, this belief is relatively uninformed and fails to consider all aspects. Yes, education is good, and, yes, that slip of paper often guarantees a high-paying salary, but who says the absence of either seals a horrific fate?

​As of 2017, 30 million jobs in the US pay $55,000 per year and don’t require a college degree, according to ​a new study from Georgetown University’s ​Center on Education and the Workforce. Now, that might not secure a Steve Jobs-esque lifestyle, but can it outweigh a decade (or more) of living in debt?

Unfortunately, as long as society continues to vociferously advocate a college education, regardless of any financial burden it may cause, it appears we can all look forward to a Ramen-filled future. But hey, at least we’ll be doing something we love, right? Right.