If you are in the US and know people who are aged 30-50 and not software engineers, this is almost all that they talk about. Some people manage to pay them off, others (due to high interest) owe more than when they started. It is a huge problem.
Yep, I'm a software engineer and just about to pay them off (I slowed down because of the deferred loans, could have had it done in 2020).
Meanwhile my wife only makes an appreciable dent in hers whenever she gets a gift from family members, and she's still paying $900 a month to not do much more than tread water. She did get it paid down a bit more thanks to the past two years of deferrals, but she still owes a lot more than I ever borrowed (two years of my school were paid for by a scholarship).
It's been a steady drag on our income since we've been together. At least mine is just about to go away, mine was $400/month as well... that $1300/month is almost as much as our mortgage payment.
I have multiple friends that have just given up on ever paying off their student loan debt in their lifetime and only pay enough to keep it where it is (or slowly increasing even). You wonder why people aren't buying homes and having children, there it is. I guess the solution to overpopulation is just saddle everyone with a bunch of debt, then.
It would if it were true. But in reality, there are lots of people with $40k starting salary jobs (example: a librarian, which requires a masters degree!) paying off $50k loans with 8% interest rates.
It's probably my Canadian experience talking, but this sentence:
> 85% of graduates have less than $50,000 in student loans. Paid off over 20 years, that’s really not much.
It is pretty terrifying that you manage to mentally justify going in debt for 20 years over your college education. I understand that given a good job it's easy to pay it back, but I never even borrowed even a tenth of that to complete my engineering degree and I've probably paid my education back several time in taxes to the government.
1. Efficiency. Canadian universities deliver similar/better products at much lower cost. Not just cost at point of use, but actual "amount of money spend annually to deliver education".
2. Financing model. Taxation allows you to fund things without paying interest to a middle man. If you pay off a set of loans whose principle is 50K, but with 5%-7% interest rates, then you're paying a lot more than 50K. So even if the products were equal in price, the taxation model might work out ahead.
1. That number seems way off. What are your assumptions?
2. I haven't looked at the data, but I'm going to go out on a VERY short branch here and assert that the entire delta between US and CA tax rates is not consumed by higher education.
Honestly (I know that's not true of all states) but I worked in California and the taxes I was paying there were higher than my taxes in Quebec/British Columbia.
Yes taxation is higher, but I still feel like we get a lot more bang for our bucks here.
Part of the issue is that you can get these loans regardless your program. Chemical engineering? Here you go. Studying gay romances in 14th century literature? Yup, here's your 50k too.
One of those people can pay that loan off in two years. One of them is likely never going to pay it off without a career change.
Of course, we probably don't want loan officers picking what poor people can major in either.
The person studying gay romances in 14th century literature is probably a PhD student with a stipend and full tuition remission. They're getting subsidized by MBA tuition dollars, not by loans.
Sure, but they go through an undergrad in English or something similar before they are a PhD, for which they take the loan, then they don't earn any money (just enough to subsist) while the interest on their undergrad loan accrues. Or the interest may be deferred but the loan is still there.
I'm an advocate for requiring career counseling before taking out student loans.
I would not say that people should be denied based on their chosen major, but prospective students should be shown statistics on the average salaries, unemployment, and usage rates of the major they're interested in and compare it to the projected costs and resulting loan debt.
Exactly. The fellow above is foolish to think that even $10k is manageable for people in entry level jobs. Even good coders have to strain to pay off $10k-20k.
Plus, you're right that the interest rate is insane when banks are paying 1%.
"Below $50,000". And student loans have low rates unless you go private. Of course, who is more likely to need private loans they may not be able to pay? Probably not the trust fund kids.
"Low rates" here meaning 8%?! It's lower than credit card APR, but would you take a large installment loan at that rate?
The interest rate especially shocking when you consider that interest is supposed to pay for the creditor taking on the risk of default, which is almost impossible with student loans.
Federal guarantees for the $120+ billion in annual new student loans that the DOE boasts of in its annual letter are still one of the primary drivers of tuition inflation - with tuition increases compounded over decades that increases costs for both those who take loans and those who don't.
Yes, we shouldn’t penalize people for getting an education and becoming better citizens. Many are drowning in the non-absolvable debt for student loans. And the entry level out of med school is a residency making a third of that number.
I know someone who's about to a Physical Therapist, doctorate. she's gonna leave school owing 200k+. yet starting salary will be 85k that I made coming out of state college as a CS grad.
this times 100x. The problem may seem really bad, but wages are high enough that college grads still earn more than high school grads even after accounting for inflation and student loan debt.
85% of graduates have less than $50,000 in student loans. Paid off over 20 years, that’s really not much. https://www.rclco.com/wp-content/uploads/advisory-student-de...
Additionally, those that have much higher loans are usually medical students who make $200,000/year at the entry level.