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Student loan debt is crippling for college graduates, their families, and society.

Tuition has risen quicker than income, making college unaffordable for many and forcing students to take out loans. A Mar. 2017 study found that 14% of community college students were homeless and 51% had housing insecurity issues (inability to pay rent or utilities, for example), while 33% experienced food insecurity (lack of access to or ability to pay for “nutritionally adequate and safe foods”), though 58% of the students were employed and 42% received federal Pell Grants. From the 1986-1987 school year to the 2016-2017 school year, the average cost of one year of college (including room and board) increased for 4-year private schools (109.6%) and 4-year public schools (125.7%), while median family income only increased 10.0% between 1986 and 2015. From the 1976-1977 school year to the 2016-2017 school year, annual tuition rates rose for community colleges (173.1%), 4-year public colleges (271.2%), and private 4-year colleges (213.5%). [111] [112] [113]

In spring 2023, there were over 17 million college students in the United States, and over 43 million borrowers owe a collective $1.75 trillion in total student debt. 45% of people with student loan debt say college was not worth it. 10% of students graduate with over $40,000 in debt and about 1% have $100,000 in debt. In Feb. 2018, undergraduate college graduates had an average of $37,172 in loan debt. According to the US Congress Joint Economic Committee, approximately 60% of college graduates have student loan debt balances equal to 60% of their annual income. Missing late for loan payments leads to lower credit scores and additional fees, worsening the debt problem. [36] [37] [107] [123] [133] [134]

Further, student loan debt often forces college graduates to live with their parents and delay marriage, financial independence, and other adult milestones. 20% of millennials are homeowners, and most millennials say their student debt has delayed home ownership by seven years on average. Student loan borrowers delayed saving for retirement (41%), car purchases (40%), home purchases (29%), and marriage (15%). Fewer than 50% of women and 30% of men had passed the “transition to adulthood” milestones by age 30 (finishing school, moving out of their parents’ homes, being financially independent, marrying, and having children); in 1960, 77% of women and 65% of men had completed these milestones by age 30. [38] [39] [121]

Student debt also overwhelms many seniors. Whether they co-signed for a child or grandchild’s education, or took out loans for their own educations, in 2012 there were 6.9 million student loan borrowers aged 50 and over who collectively owed $155 billion with individual average balances between $19,521 and $23,820. Of the 6.9 million borrowers, 24.7% were more than 90 days delinquent in payments. Almost 119,000 of older borrowers in default were having a portion of their Social Security payments garnished by the US government in 2012. [51] [52]

Student loan debt may not be forgiven in bankruptcy and may not have the same borrower protections as other consumer debt. A study found 60% of people attempting to discharge student loan debt in bankruptcy were unsuccessful. Medical, legal, credit card, loan, and even gambling debt can immediately be discharged in bankruptcy, but getting student loan debt discharged is much more difficult and rare. Private student loans often do not have the same protections as federal loans like income-based repayments, discharges upon death, or military deferments. [61] [70] [71]

College graduates aren’t the only ones overwhelmed by debt. Many students do not graduate and waste their own and their government’s money. About 19% of students who enroll in college do not return for the second year. Students who drop out during the first year of college cost states $1.3 billion and the federal government $300 million per year in wasted student grant programs and government appropriations for colleges. Overall, 41% of students at four-year colleges and universities did not graduate within six years: 41% at public schools, 34% at private non-profits, and 77% at private for-profits. Students who did not graduate within six years accounted for $3.8 billion in lost income, $566 million in lost federal income taxes, and $164 million in lost state income taxes in one year. [50] [117]

Finally, student debt could cause another financial crisis. As of 2012 student loan debt was over $1 trillion dollars, and more than 850,000 student loans were in default. According to the National Association of Consumer Bankruptcy Attorneys, student loans are “beginning to have the same effect” on the economy that the housing bubble and crash created. Former Secretary of Education William Bennett, PhD, agrees that the student loan debt crisis “is a vicious cycle of bad lending policies eerily similar to the causes of the subprime mortgage crisis.” On Feb. 3, 2012, an advisory council to the Federal Reserve also warned that the growth in student debt “has parallels to the housing crisis.” As of Jan. 2013, the rate of default on student loans hit 15.1%–a nearly 22% increase since 2007. [61] [62] [63] [64] [65]

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