The average loan-holding 2014 college graduate will have to pay back $33,000.
The class of 2014 deserves our congratulations, but not for graduating — though that’s nice, too — but for earning one of the more dubious distinctions in recent memory: You’ve officially been named “the most indebted class ever.”
According to the Wall Street Journal and data compiled by analyst Mark Kantrowitz, the average loan-holding 2014 college graduate will have to pay back $33,000. That’s up from around $31,000 in 2013 and under $10,000 in 1993:
As the chart above indicates, average student loan debt has increased every year for at least the past two decades. And more kids are accumulating debt — since 1993, the percentage of students taking out loans for college has risen from around 46% to 70%.
What does this mean for your future? Luckily, a college education is still a worthwhile investment. Not only are college grads generally more employable, they earn significantly more than their degree-less counterparts.
The problem arises when you consider the widening rift between average post-college salaries and how much students go into debt to earn them. Between 2005 and 2012, for instance, average student loan debt jumped 35%, adjusting for inflation, while the median salary dropped 2.2%.
This alone is disheartening. But added to the oft-cited mantra that you should never borrow more for college than you can expect to make in your first year of employment and you’re looking at choppy seas ahead. For the time being, matters seem manageable — according to 2012 data, the median salary for a someone holding a B.A. was $46,900, while the “average student loan balance” for people under 30 stood at $21,000. But things are definitely getting worse, and recent and future graduates will increasingly have to shoulder the burden.
Here’s more terrible news: This situation sucks for everyone.
Along with the growing numbers of Broke Phi Broke grads, recent evidence suggests that America’s $1.1 trillion student loan debt crisis is messing up the economy. The New York Times reports a sound correlation between average debt and the plummeting number of 27- to 30-year-olds taking out home mortgages.
It makes sense: The more money you owe, the less you have to spend on a down payment. But considered on a grander scale, the pattern of fewer mortgages — whatever the cause may be — also spells bad news for future economic growth. The housing industry has always been instrumental helping the United States recover from past recessions, but since 2008, it’s made less than half its normal economic contribution — a fact partially attributable to the decreased investments from young people.
So what can be done about this? You can try “rocking the vote,” but it probably won’t get you far. The federal government seems pretty committed to its slew of moronic multi-billion dollar investments, whether it’s our massive prison system or the trillion dollar F-35 fighter jet program. And colleges are just fine continuing to jack up tuition costs like it’s going out of style.
Basically, no one cares about your problems. But take heart, graduates, and consider the silver lining: Your “most indebted” title will almost certainly be overtaken by the class of 2015!
Photo credit: America Wakie Wakie