The blockbuster announcement by billionaire Robert F. Smith that he will pay off the student loans held by Morehouse College’s entire graduating class of 2019 hit a nerve for a couple of reasons. Besides being incredibly generous, many college grads could benefit from such a gift, or at least a little financial relief.
Here are a few fast facts about student loans.
1. It’s one of the biggest financial burdens. Americans are carrying $1.57 trillion in outstanding student loan debt, more than what they owe on their credit cards. And they are working overtime to try to pay back what they borrowed.
Among college graduates ages 25 to 39, 21% had more than one job according to a Pew Research Center analysis of Federal Reserve Board data in a 2016 household economics survey. Meanwhile, only 11% of young debt-free graduates worked more than one job.
2. Average debt could cover the cost of a new car. As of June 2018, the average debt carried by those who obtained a Bachelor’s Degree was $29,800. And the financial burden doesn’t just affect the young. A surprising number of older Americans who returned to school to burnish their skills, or borrowed to help their kids or grandchildren get an education are also weighed down by loans.
In the last 15 years, student loan debt has increased fastest among Americans 60 and older according to the AARP Public Policy Institute. And in 2016, 9.6% of families headed by an adult who was at least 50 years old had student loan debt, up from 3.1% in 1989.
3. The costs keep on growing. For students attending a public four-year-college in their home state, tuition is rising on average 2.5% a year. At a private nonprofit school, the tuition hike hovers at 3.3%. When you tack on room and board, those increases come in at 2.8% and 3.2% respectively.
And for many who have to borrow in order to pay those fees and costs, they’re not so sure it will all be financially worth it in the end. According to Pew, 51% of college graduates ages 25 to 39 who must pay back student loans say the financial advantages they’ll gain over a lifetime outweigh what they’ve had to pay. Meanwhile, 69% of those who aren’t carrying a debt burden say the long-term advantages outweigh the costs.
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