The New York Fed recently released new data on national student debt, painting a bleak picture of the future for middle class students and their families: the total amount of student debt has grown to $902 million – and average of $24,301 per person.
To make matters worse, it’s increasingly likely that many students with debt will never finish their degrees. According to Anthony Carnevale of the Center on Education and the Workforce at Georgetown, nearly 30 percent of college students with loans today won’t complete their degrees, leaving them with lower wages, fewer job prospects and overwhelming debt.
Student loan debt is the only type of consumer debt that has grown since 2008. In fact, excluding mortgages, student loan debt is now the largest form of consumer debt in America, bypassing both auto loans and credit cards.
The New York Fed’s numbers confirm that rising student debt isn’t just affecting students, it’s putting a damper on the entire economy.
Parents in particular are taking on greater debt to finance their children’s educations. While borrowers aged 50-59 had an average student loan debt of only $14,714 in 2005, they owe an average of $23,183 today. And parents and grandparents who co-signed on student loans are also taking a big hit – more than 100,000 seniors had their Social Security payments reduced last year to service delinquent loans.
In Washington state, the numbers don’t look much better. Fifty-nine percent of students leave college with an average of $22,101 in debt. These numbers should be a call to action for our local educators, administrators, and elected leaders.
Two ways Washington lawmakers can make college more accessible and affordable to counter these trends:
- Reforming Washington’s tax structure to provide a dedicated funding source for higher education, and
- Implementing Pay It Forward, an alternative financing model in which students attend four years of college without paying tuition. In return, they pay 4 percent of their annual income over the next 25 years back to the university. (Ed. Note: EOI’s John Burbank recently discussed Pay It Forward and other issues surrounding college affordability on KUOW 94.9. The audio of that broadcast is available here.)
Without addressing this growing debt burden and opening new avenues of learning through our universities, community colleges, and vocational programs, a full economic recovery may never come for the current generation of Americans – or even the next. Making education available and affordable for all Americans is an economic imperative.
By EOI intern Travis Crayton