The importance of obtaining higher education has become an essential ingredient in the pursuit of financial success. In recent Recession years, a college education has become a non-negotiable course of action to facilitate a higher, long-term income — and that’s where the double-edged sword comes into play. Our generation is faced with the: “everyone needs an education, but no one can seem to afford it,” conundrum. Cue student loans.
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While student loans are designed to “help” students fund university tuition fees, books and living expenses, there are currently 37 million student loan borrowers with outstanding, student loan debts! The repayment time frame for these student installment loans are up to 10 – 25 years.
Nearly 20 million Americans attend college each year. Recent U.S. reports estimate there is between $902 billion and $1 trillion worth of outstanding student loan debt in America. According to the Consumer Finance Protection Bureau, “there are approximately $864 billion in outstanding federal student loan debt, while the remaining $150 billion is in private student loans.”
Private student loans are not made or backed by the federal government. In 2012, the average student loan balance for all age groups was $24,301. FRBNY data shows that 25% of borrowers owe more than $28,000, 10% of borrowers owe more than $54,000 and 3% owe more than $100,000 (and less than 1%). In total, an estimated 167,000 people owe more than $200,000 worth of student loans!
Median Debt Among All Bachelor’s Degree Recipients
According to College Board statistics, a public, four-year institution can incur $7,960 worth of debt. In contrast, private, four-year institutions incur double the debts, with $17,040 worth of student loan repayments. Additionally, a proprietary education can set student loan borrowers back $31,190 in debt!
Of the 37 million Americans who have outstanding, student loan debts, almost 40% of these borrowers are under the age of 30! Furthermore, nearly 42% are between the ages of 30 and 50, and an estimated 17% are older than 50. Some of these borrowers might temporarily resort to other short term loans when they couldn’t repay these debts in time.