- Student-loan debt in the US is at an all-time high.
- The consequences of student-loan debt have a domino effect: Millennials are delaying life milestones because they can’t afford them.
- Democratic presidential candidates have proposed policies to offset the cost of college.
- Visit Business Insider’s homepage for more stories.
America is suffering from a student-loan debt crisis.
It’s part of the Great American Affordability Crisis. Coupled with the fallout from the recession and a high cost of living, student-loan debt has made it difficult for millennials to save and has forced them to delay milestones like getting married, buying a house, and having kids.
Democratic presidential candidates have been proposing policies to offset the cost of college. Sen. Elizabeth Warren introduced a $US1.25 trillion plan to forgive most existing student-loan debt and provide universal free college. John Delaney, Rep. Seth Moulton, and Sen.Kirsten Gillibrand have proposed student-debt forgiveness or subsidized college for students who go into national service.
Here are 11 facts that show just how dire student-loan debt in America is.
1. The national total student debt is now over $US1.5 trillion.
2. College tuition has more than doubled since the 1980s.
From the late 1980s to 2018, the cost of an undergraduate degree increased by 213% at public schools and 129% at private schools, adjusting for inflation, Student Loan Hero reported, citing stats from The College Board.
During that time, annual tuition rose to $US9,970 from $US3,190 for public schools and to $US34,740 from $US15,160 for private schools.
Wages, meanwhile, have increased by 67% since 1970, according to a 2018 Student Loan Hero report.
3. More than 3 million senior citizens in the US are still paying off their student loans.
Young people aren’t the only ones paying off debt. More than 3 million Americans ages 60 and older owe more than $US86 billion in unpaid student loans, INSIDER’s Kelly McLaughlin reported, citing Consumer Financial Protection Bureau data seen by CBS News.
To pay it off, they’re turning to their Social Security benefits, CBS News reported.
4. As of May 2018, 101 people in the US owe at least $US1 million each in student loans, The Wall Street Journal reported, citing the Education Department.
Costs for professional degrees are rising too. In 2013, only 14 people in the US owed $US1 million or more each on their federal student loans, The Wall Street Journal reported, citing the Education Department. By 2018, that had increased to 101 people.
Interest rates for graduate students increased by more than 6 percentage points from 2004 to 2012, according to The Journal.
Consider Mike Meru, an orthodontist who owed $US1,060,945 in student loans as of May 2018 and is expected to face a $US2 million loan balance in the next two decades, The Journal said.
Meru’s situation shows that, despite high salaries, becoming a doctor, a dentist, or even a lawyer isn’t the path to wealth it once was.
5. Black families carry more debt than white families and are more likely to default on their loans.
Black graduates with a bachelor’s degree default on their loans – meaning they do not make a payment for 270 days – at five times the rate of white graduates, a January 2018 Brookings Institution report found. They are also more likely to default than white college dropouts.
A recent Wall Street Journal report found that graduates of historically black colleges had 32% more debt than students at other colleges and that most had not paid off any debt in their first few years out of school.
Carrying student loans keeps the wealth gap between black and white families startlingly wide: A Levy Economics Institute study last year found that with student debt, young white families had 12 times as much wealth as black ones; eliminating that debt lessened that to just five times as much wealth.
6. As many as 40% of borrowers could default on their student loans by 2023.
The 2018 Brookings Institution report followed students who were paying loans up to 20 years after graduation and found that the rate at which people defaulted on their loans continued to rise 12 to 20 years after graduation.
By analysing the rate of default 20 years after graduation for those who started college in 1995 and 2003, the report predicted that nearly 40% of borrowers could default on their loans by 2023.
7. Of people who use a bankruptcy-assistance service to file for Chapter 7 bankruptcy protection, 32% carry student-loan debt.
Chapter 7 bankruptcy protection is used to liquidate the assets of people with limited incomes who can’t pay back all or a portion of their debt. The goal is to discharge the debt.
Student-loan debt, however, is generally non-dischargeable in bankruptcy.
8. Some US workers would even ditch vacation time for help paying their loans.
Even after graduating and landing a job, workers say they’re still desperate for help paying off student loans.
Of people with student loans, 63% said they would give up paid time off in exchange for help paying off student loan debt, according to a new survey by job marketplace ZipRecruiter provided to Business Insider.
Workers said they would forgo an average of two months of vacation time in exchange for debt relief, though a staggering one-fourth of Americans would give up as much as five months PTO.
9. Student-loan debt is the reason 13% of Americans in a survey conducted last year said they decided not to have kids.
Student-loan borrowers are also delaying or refraining from buying a house, because they can’t afford it.
“I don’t feel comfortable taking a loan on a house while having student loans,” Boone Porcher, a supply-chain consultant who owes $US32,645 after five years at a public university, previously told Business Insider.
Another graduate, a water-resources engineer who graduated from a public university with roughly $US25,000 in debt, told Business Insider, “I feel like buying a house is a total pipe dream at this point in my life, but I’m tightening my belt as much as possible to save for a down payment right now.”
10. Some have drawn parallels between the student-debt crisis and the subprime-mortgage disaster.
The rate at which student-loan borrowers can’t pay their debt looks a lot like the rate at which people could not pay their mortgages during the 2008 financial crisis.
As of 2017, default and 90-day delinquency rates for student loans hovered at 11%, according to a report by Citi Global Perspectives & Solutions. Delinquency rates during the mortgage crisis peaked at 11.5% in 2010.
The report found that those with lower debt were actually more likely to default, since those with more debt tend to have degrees that lead to higher-paying jobs. Those with less initial debt, meanwhile, likely dropped out without a degree to get a better-paying job.
That’s not the only parallel between today’s student-loan crisis and the financial crisis: Total US consumer debt was higher in the first quarter of this year than it was in 2008, a Marquette Associates analyst told MarketWatch last week.
11. Nearly 50% of millennials who have or had student-loan debt think college wasn’t worthwhile.
In a recent INSIDER and Morning Consult survey, when asked whether it was worth attending college based on their current financial situation and their student loans, about 21% of respondents said “definitely not” and about 23% said “probably no.”
Unsurprisingly, respondents who are still paying off their student-loan debt felt worse about having gone to college than millennials who had already paid off their debt.