This month’s college graduations have prompted many to point towards the current class of graduates as the most indebted ever.
As the current crop of college graduates puts away their books and looks towards the future, there will always be one eye on the past. Or, more specifically, the money borrowed in order pay for their recently attained qualifications – money that must now be paid back, even before the students have had the chance to look for work in an economy where employment opportunities are slimmer than years before. Yes, this current class is the most indebted ever, but that will likely change in 2015 with the price of education and student borrowing continuing to rise.
The average graduate of the class of 2014 is saddled with around $33,000, according to data provided by the federal government. Even after accounting for inflation, that’s almost twice as much money as the average student debt in 1994. At the same time, it can be seen that more students than ever before are taking on debt in order to fund their education. Of those that have received a degree this summer, for example, almost 75% have taken out a student loan. This can be compared to less than 50% of those who graduated a couple of decades ago.
As the cost of education and the cost of borrowing to fund education continues to rise, and with the economy still recovering, many have posed the question of whether a degree is worth it. Analyzing the data tells us that, despite this cost, it is still worth taking out a loan in order to fund your future. College graduates continue to find it much easier to find a job, despite the current economic climate, and will typically end up making more money in the long run. It can however be seen that the median salary for new graduates has dropped in recent years, though that may simply be a product of the current economic woes.
We can however look at the more sympathetic, income-based repayment plans as a bright horizon for future students. These plans have an excellent chance of being implemented in the near future, and will protect future graduates from repaying loans before they are able to. As such, student loans remain an attractive prospect for those who have the opportunity, despite their growing cost and the increasing amount of debt with which young people are burdened thanks to rising interest rates.