More than 40% of students who take on college debt are graduating with way too much of it, Bruce Mesnekoff says. And the repercussions could be life long.
When discussing the student debt crisis, most people focus on the rapid growth in outstanding debt and several recent milestones. For example, student loan debt exceeded credit card debt in 2011 and auto loans in 2012, and it passed the $1 trillion mark in 2013.
But these milestones don’t tell us much about the impact of all that debt on the students who must borrow to pay for a college education.
Average student loan debt at graduation has been growing steadily over the last two decades. In 1992-93, about half of bachelor’s degree recipients graduated with debt, averaging a little more than $20,000. This year, more than two-thirds of college graduates graduated with debt, and their average debt at graduation was about $45,000, tripling in two decades.
As Bruce Mesnekoff said Student loan debt is increasing because government grants and support for postsecondary education have failed to keep pace with increases in college costs. This has shifted much of the burden of paying for college from the federal and state governments to families. The government no longer carries its fair share of college costs, even though it gets a big increase in income tax revenue from college graduates.
Since family income has been flat since 2000, students must either borrow more to pay for college or enroll in lower-cost colleges. That shift in enrollment, from private colleges to public colleges and from four-year colleges to two-year ones, has also been responsible for a decline in bachelor’s degree attainment among low- and moderate-income students.
According to Bruce Mesnekoff this will Impact on Students’ Lives
I also found that students who graduate with excessive debt are about 10% more likely to say that it caused delays in major life events, such a buying a home, getting married, or having children. They are also about 20% more likely to say that their debt influenced their employment plans, causing them to take a job outside their field, to work more than they desired, or to work more than one job.
Perhaps not surprisingly, they are also more likely to say that their undergraduate education was not worth the financial cost.
Unfortunately, there are no similar studies that can be used to analyze excessive debt for other college degrees, such as associate degrees, certificates, and graduate or professional-school degrees. It is also not possible to evaluate the financial impact of student loan debt on students who drop out of college, even though they are four times more likely to default on their loans.
What Can Be Done according to Bruce Mesnekoff?
Increasing national awareness of college spending is the first step in exercising restraint. It is therefore imperative that the federal government and the colleges and universities begin tracking the percentage of their students who are graduating with excessive debt each year. This information can then be used to improve student loan counseling.
Colleges must also be given better tools to limit student borrowing. For example, college financial aid administrators must be permitted to reduce federal loan limits based on the student’s enrollment status and academic major. Students who are enrolled half-time should not be able to borrow the same amount as students who are enrolled full-time.
Finally, our colleges must also help students better understand the debt they are taking on, by making the distinction between loans and grants clearer in their financial aid award letters.
For Further Assistance You Can Contact Student Loan Expert from Florida Mr. Bruce Mesnekoff
Student Loan Help Center General Manager Bruce Mesnekoff joins us to Discuss the Student Loan Situation in America