Spring is a time of transition, from cold to warm, rainy to sunny and student to employee. For many of the class of 2015 that transition can’t come fast enough.
College graduates this year are the most indebted class ever, yet its a title they’ll only hold exclusively for about 12 months if current trends continue.
It’s an increasingly concerning problem in America – the cost of college education is rising tremendously while wages and employment prospects are steady to declining. Wages, in real terms, have actually been falling.
The average class of 2015 student who owes debt will have to pay back over $35,000, according to an analysis of government data by Mark Kantrowitz, publisher at website group Edvisors.
That number, adjusted for inflation, is still more than twice the amount borrowers had to pay back two decades ago.
All this while the value of a college education is dropping. More graduates are being pumped out than ever, meaning an undergraduate degree isn’t as valuable as it once was. Students are increasingly doing two, three or even four degrees in an effort to out-qualify their peers and land that dream job.
All together, total private and federal education debt will tally nearly $68 billion this year for graduates with a bachelor’s degree which is a more than 10-fold increase since 1994.
The White House is assessing ways to tackle the problem as it closes down for-profit schools costing taxpayers hundreds of millions. The problem could have widespread economic ramifications as credit rating agency Moody’s has warned that $3 billion in student loan-backed paper is at risk for default. And that’s hard default – once deferments, forbearance, and IBR are factored in, actual delinquencies could be above 40%.
Look for developments in this space in coming months, especially if the U.S. economy hits any bumps in the road. Should job markets, especially for new grads, shrink there could be serious knock-on effects in the broader economy.
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