Sky-high student debt

Sky-high student debt

November 23rd, 2011 in Opinion Free Press

Anyone can understand why many students want to go to college: The Census Bureau says that on average, a person with a college degree will earn anywhere from $500,000 to $1 million more over a lifetime than a person without a degree will earn.

While there are certainly other productive possibilities after high school -- such as joining the military -- college is a path to higher earnings for millions of young people.

But what about all the debt that so many students pile up in their pursuit of a degree? Varying estimates say U.S. student debt now totals from $750 billion to more than $1 trillion.

That is more than total U.S. credit card debt!

Of course, a student loan is a wiser investment than filling up a credit card with frivolous purchases. An education is a springboard to better things, whereas pricey clothes and electronic gizmos may not be.

But here is the trouble: In today's economy -- which is growing barely, if at all -- many college graduates are entering a workforce where too few employment options await them. Unemployment is at a painful 9 percent, and even a college degree, while valuable, is no guarantee of a job.

With the economy having been weak for several years, it is perhaps not surprising that defaults on federal student loans rose to almost 9 percent in the most recent fiscal year -- up from 7 percent.

That suggests that many students finishing college in recent years -- or worse yet, not completing their degrees after borrowing lots of money for school -- are having little luck finding jobs. Or perhaps they have found jobs, but those jobs do not pay enough to cover their student loan payments and other expenses.

Those numbers are alarming, because the federal government accounts for about 85 percent of student debt. If high percentages of recent college graduates begin defaulting on their federal student loans, that has serious implications not only for those students but for all Americans.

The heavy student debt load suggests the need for commonsense measures such as urging students to attend good but lower-cost colleges and community colleges where they can pay more of the up-front cost of attending -- rather than rely so much on loans.

Education is clearly worthwhile, but avoiding needless student debt is in everyone's interest.