THesis Elias

Student loan debt is at a record high of $1.1 trillion, and the average undergraduate who borrows to attend school graduates nearly $30,000 in debt. Almost 20 percent of student borrowers are in default.
Carey, Kevin. “A Quiet Revolution in Helping Lift the Burden of Student Debt.”
The New York Times. N.p., 25 Jan. 2015. Web. 2 Mar. 2015.
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A study of recent college graduates conducted by researchers at Rutgers University and released last week found that 40 percent of the participants had delayed making a major purchase, like a home or car, because of college debt, while slightly more than a quarter had put off continuing their education or had moved in with relatives to save money.
Martin, Andrew, and Andrew W. Lehren. “A Generation Hobbled by the Soaring Cost
of College.” The New York Times. N.p., 12 May 2012. Web. 2 Mar. 2015.
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the educational debt burden of many so-called millennials has sharply increased even as they are being forced to get by on significantly less income than the previous generation — a decline of about 15 percent in real terms since 2000, with much of that drop coming from the recession.
Lowrey, Annie. “Student Debt Slows Growth as Young Spend Less.” The New York
Times. N.p., 10 May 2013. Web. 2 Mar. 2015. .
For one thing, it appears that people with student loans are less likely to start businesses of their own.
Korkki, Phyllis. “The Ripple Effects of Rising Student Debt.” The New York
Times. N.p., 24 May 2014. Web. 2 Mar. 2015. .
A new report from Gallup found college graduates with higher levels of student loan debt were less likely to be thriving physically, to have a good sense of purpose and to be involved in their communities.
Bidwell, Allie. “Student Debt Hurts More Than Your Wallet.” US News. N.p., 7
Aug. 2014. Web. 2 Mar. 2015. .
For some couples, a heavy student debt load has meant postponing marriage. About 7% of adults who took out college loans said they delayed getting married or starting a family because of their need to pay back the debt, according to a 2011 Pew Research study.
Tompor, Susan. “Will you marry me (and my student loan debt)?” USA Today. N.p.,
25 May 2013. Web. 3 Mar. 2015. .
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In the last thirty years, tuition prices are up 538%, aggregate student loan debt is now in the trillions, and the average debt load is over $30,000.
Bergman, Dave. “The life-altering impact of Student Loans.” College Transitions.
N.p., 19 Jan. 2015. Web. 3 Mar. 2015. .
The quintessential American dream may include graduating college, getting a job and eventually buying a home. However, the increasing cost of student loan debt may be altering that trajectory for many millennials.
“How Student Loan Debt is Affecting Home Ownership.” Forbes. N.p., 6 Sept. 2014.
Web. 3 Mar. 2015. .
LoanDepot data did indicate some loan-approval impact as a result of student debt
“How Student Loan Debt is Affecting Home Ownership.” Forbes. N.p., 6 Sept. 2014.
Web. 3 Mar. 2015. .
Because high monthly student loan payments may cause some lenders to deny potential homeowners, some in the industry have called for a change. Currently, lenders use credit scores and income date to generate an approved or denied status.
“How Student Loan Debt is Affecting Home Ownership.” Forbes. N.p., 6 Sept. 2014.
Web. 3 Mar. 2015. .
Rising tuition rates will require higher loan amounts needed to complete a program. Skipped or nonpayment will impact the loan consumer’s credit rating and may impact his or her ability to qualify for mortgages and other loans. These life issues need to be part of the decision process in choosing schools and educational goals
Feeg, Veronica D. “Nursing Student Loan Debt.” Medscape. N.p., 2014. Web. 3 Mar.
2015.
More than 70 percent of students leave college with school debt, and the average loan balance is growing.
Dowdy, Landon. “How not to drown in student loan debt.” CNBC. N.p., 3 Mar. 2015.
Web. 3 Mar. 2015. .
Sen. Elizabeth Warren’s commonsense bill to allow those with student loan debt to refinance at a lower rate while asking the wealthy to pay their fair share failed to pass in the Senate. However, earlier in the week, President Barack Obama signed an executive order to make student debt more manageable for millions.
Flaherty, Colleen. “Degrees Not Debt: Student loan debt affects families,
students and educators.” Education votes. N.p., 17 June 2014. Web. 3 Mar.
2015. .
“Americans borrow more because they have to meet escalating college costs. For that reason alone, students in other parts of the world simply don’t need to borrow as much, or at all, for their education.”
Sheehy, Kelsey. “Undergrads Around the World Face Student Loan Debt.” U.S. News.
N.p., 13 Nov. 2013. Web. 3 Mar. 2015. .
By comparison, tuition is free at public universities in countries such as Argentina, Iceland, Norway and Sweden.
Sheehy, Kelsey. “Undergrads Around the World Face Student Loan Debt.” U.S. News.
N.p., 13 Nov. 2013. Web. 3 Mar. 2015. .
“People always seem stunned that the American system even sustains itself under the current conditions,”
Sheehy, Kelsey. “Undergrads Around the World Face Student Loan Debt.” U.S. News.
N.p., 13 Nov. 2013. Web. 3 Mar. 2015. .
No other country imposes the kind of costs on college and university students that the U.S. does, and nowhere else do loans cover so much of those costs. Experts think that the $1.2 trillion in outstanding education debt in the U.S. is more than that of the rest of the world combined.
Lorin, Janet. “The Rising US Burden.” Bloombergview. N.p., 8 Oct. 2014. Web. 3
Mar. 2015. .
Recent studies also show a growing economic divergence between young Americans with and without student loans.
Lorin, Janet. “The Rising US Burden.” Bloombergview. N.p., 8 Oct. 2014. Web. 3
Mar. 2015. .
Outstanding federal student loan balances for people 65 and older have ballooned from about $2.8 billion in 2005 to $18.2 billion in 2013, according to a GAO analysis of Survey of Consumer Finances data. There are now approximately 706,000 senior citizen households that still have student loan debt.
Brandon, Emily. “More Seniors Carry Student Loan Debt into Retirement.” U.S.
News. N.p., 11 Sept. 2014. Web. 4 Mar. 2015.
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This is no small figure, and national debt carries many consequences including slowing economic growth (translating into fewer jobs being created) and rising interest rates. Capital will not be as easy to access.
Denhart, Chris. “How The $1.2 Trillion College Debt Crisis Is Crippling
Students, Parents And The Economy.” Forbes. N.p., 7 Aug. 2013. Web. 4 Mar.
2015. .
If we go back to that average figure of $26,600, compounding for interest year over year using the 10-year-payback plan that is the standard, the total cost of your $26,600 loan is about $38,600.
Denhart, Chris. “How The $1.2 Trillion College Debt Crisis Is Crippling
Students, Parents And The Economy.” Forbes. N.p., 7 Aug. 2013. Web. 4 Mar.
2015. .
“Debt costs you time in savings, pushes back when and whether you can buy a home, start a family, open a small business or access capital,” says Asher.
Denhart, Chris. “How The $1.2 Trillion College Debt Crisis Is Crippling
Students, Parents And The Economy.” Forbes. N.p., 7 Aug. 2013. Web. 4 Mar.
2015. .
Further, “Most Americans perceive a college education as the ticket to the American Dream,” although some warn that soaring student loan debt and a shortage of good jobs may undermine this ticket.
Bray, Lora. “Student Loan Debt Inhibits American Dream for Many.” Credit Union
Magazine. N.p., 12 May 2014. Web. 4 Mar. 2015.
‘Education: A debt due from present to future generations.’—George Peabody, entrepreneur and philanthropist
Bray, Lora. “Student Loan Debt Inhibits American Dream for Many.” Credit Union
Magazine. N.p., 12 May 2014. Web. 4 Mar. 2015.
Student loan debt also delays saving for retirement. This is especially problematic, as this generation will endure changes in retirement plans, the elimination of pensions, and the likelihood of increased taxation
Bray, Lora. “Student Loan Debt Inhibits American Dream for Many.” Credit Union
Magazine. N.p., 12 May 2014. Web. 4 Mar. 2015.
But ultimately, families also are affected as “carrying outstanding student loan debt can affect whether borrowers make other financial commitments… like buying a home, starting a family, opening a small business” and making retirement contributions.
Bray, Lora. “Student Loan Debt Inhibits American Dream for Many.” Credit Union
Magazine. N.p., 12 May 2014. Web. 4 Mar. 2015.
Nonetheless, many young people taking out student loans quickly find that the deck is stacked against them
Pianin, Eric. “Student Loan Debt Is Crushing The American Dream.” Business
Insider. N.p., 1 Mar. 2012. Web. 4 Mar. 2015.
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Children are told when they’re growing up that college is their only option because it’s a cold, dog-eat-dog world out there. But what gets lost in translation during our formative years is the value of a dollar and how to manage our finances.
Williams, Chris. “The American Dream Should Really Be Called the American Debt.”
The Guardian. N.p., 27 Aug. 2013. Web. 4 Mar. 2015.
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Some would argue it’s a young person’s singular choice to go to college, but when you’ve been almost brainwashed by the larger society into believing the only way you’ll be successful is by attending college, what are you supposed to do?
Williams, Chris. “The American Dream Should Really Be Called the American Debt.”
The Guardian. N.p., 27 Aug. 2013. Web. 4 Mar. 2015.
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The president’s latest plan isn’t enough. Until corporations stop outsourcing jobs and our country returns to being innovative about new job creation, students and their debt will continue to be the economic backbone on which our society leans on.
Williams, Chris. “The American Dream Should Really Be Called the American Debt.”
The Guardian. N.p., 27 Aug. 2013. Web. 4 Mar. 2015.
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“If student loan borrowers continue to sit on the sidelines and delay financial commitments, the U.S. economy will plod cautiously along — rather than thrive with the help and economic investment of a new generation of well-educated consumers, eager to participate in driving the economy but hampered by their college debt,” the report says.
Kingkade, Tyler. “Student Debt Is Making All Your Life Choices Worse.”
Huffington Post. N.p., 24 Sept. 2013. Web. 4 Mar. 2015.
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Three-fourths of respondents said they put off saving for retirement or buying a home because of their debt. Almost one-third delayed marriage and 43 percent waited to start a family.
Kingkade, Tyler. “Student Debt Is Making All Your Life Choices Worse.”
Huffington Post. N.p., 24 Sept. 2013. Web. 4 Mar. 2015.
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a quarter of college students said their student loans made it difficult to buy daily necessities
Kingkade, Tyler. “Student Debt Is Making All Your Life Choices Worse.”
Huffington Post. N.p., 24 Sept. 2013. Web. 4 Mar. 2015.
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And perhaps most troubling, they are avoiding graduate and professional school programs, such as law and medical school, due to the hundreds of thousands of dollars in debt they are burdened with at the end.
Rangel, Charles. “Student Loan Debt Crisis in America.” Huffington Post. N.p., 5
Feb. 2015. Web. 4 Mar. 2015. .
Unlike other kinds of debt, student lenders are continuing to dish out loans to borrowers so young they don’t have proven financial track records or substantial credit histories.
“40 Million Americans Now Have Student Loan Debt.” CNN. N.p., 10 Sept. 2014.
Web. 5 Mar. 2015. .
“Student loans are the only credit vehicle where a lender continues to extend credit year after year without knowing the person’s ability, or even willingness, to pay,” said Michele Raneri, vice president of analytics at Experian.
40 Million Americans Now Have Student Loan Debt.” CNN. N.p., 10 Sept. 2014.
Web. 5 Mar. 2015. .
“20 percent of buyers under the age of 33, the prime group of first-time buyers, delayed their purchase because of outstanding debt. In our recent consumer survey, 56 percent of younger buyers who took longer to save for a down payment identified student debt as the biggest obstacle.”
Schlesinger, Jill. “Is Student Loan Debt Killing the American Dream?” Jill On
Money. N.p., 25 Mar. 2014. Web. 5 Mar. 2015.
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The government says that the recent surge in student loans appears to come from for-profit colleges, which account for 13 percent of students in higher education but nearly a third of all student loans and half of all defaults.
Schlesinger, Jill. “Is Student Loan Debt Killing the American Dream?” Jill On
Money. N.p., 25 Mar. 2014. Web. 5 Mar. 2015.
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Education inflation has increased at about twice the pace of overall inflation and at the same time, a college degree has become more valuable.
Schlesinger, Jill. “Is Student Loan Debt Killing the American Dream?” Jill On
Money. N.p., 25 Mar. 2014. Web. 5 Mar. 2015.
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Federal grants now pay a far lower proportion of college costs than they did in decades past. That means students finance a greater part of their own education through loans, leaving them in debt after they graduate or withdraw from college.
Turck, Mary. “US College Students Face High Debt, Shattered Dreams.”
Aljazeera America. N.p., 27 Oct. 2014. Web. 5 Mar. 2015.
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State budget cuts for higher education funding have left many public university students and their families with massive debt burdens.
Turck, Mary. “US College Students Face High Debt, Shattered Dreams.”
Aljazeera America. N.p., 27 Oct. 2014. Web. 5 Mar. 2015.
.
For those who took out no student debt, 34 percent were found to be thriving in their physical well-being, compared with 24 percent of those who took out more than $50,000
Bidwell, Allie. “Student Debt Hurts More Than Your Wallet.” US News. N.p., 7
Aug. 2014. Web. 2 Mar. 2015. .
In the last decade, even as enrollment at state colleges and universities has grown, some states have cut spending for higher education and many others have not allocated enough money to keep pace with the growing student body.
Martin, Andrew, and Andrew W. Lehren. “A Generation Hobbled by the Soaring Cost
of College.” The New York Times. N.p., 12 May 2012. Web. 2 Mar. 2015.
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A study in the January edition of Social Science & Medicine has found evidence that high levels of student debt are linked to negative psychological impacts like depression, stress and generally worse mental heal
McKay, Tom. “Student Loan Debt Is Hurting More than Just Our Wallets.” Policy
Mic. N.p., 15 Feb. 2015. Web. 5 Mar. 2015. .
“cumulative student loans were significantly and inversely associated with better psychological functioning.” They also found an effect for “yearly student loans borrowed,” suggesting that both having high levels of debt and taking the large loans out in the first place were stressing the respondents out.
McKay, Tom. “Student Loan Debt Is Hurting More than Just Our Wallets.” Policy
Mic. N.p., 15 Feb. 2015. Web. 5 Mar. 2015. .
The study also found “occupational trajectories” and “health inequities” were impacted among student debt holders, meaning that loans may be forcing students and graduates off their preferred career paths and to delay getting married or starting a family.
McKay, Tom. “Student Loan Debt Is Hurting More than Just Our Wallets.” Policy
Mic. N.p., 15 Feb. 2015. Web. 5 Mar. 2015. .
We are speculating that part of the reason that these types of loans are so stressful is the fact that you cannot defer them, they follow you for the rest of your life until you pay them off,” lead author Katrina Walsemann told ScienceDaily.
McKay, Tom. “Student Loan Debt Is Hurting More than Just Our Wallets.” Policy
Mic. N.p., 15 Feb. 2015. Web. 5 Mar. 2015. .
Paying off those loans comes at the cost of other things young Americans might want to do, such as saving for retirement. It’s a bad situation to be in, and one that seems to be getting worse, not better.
McKay, Tom. “Student Loan Debt Is Hurting More than Just Our Wallets.” Policy
Mic. N.p., 15 Feb. 2015. Web. 5 Mar. 2015. .
But it is slightly comforting to know that stressed-out loan holders are in good company: the rest of their generation.
McKay, Tom. “Student Loan Debt Is Hurting More than Just Our Wallets.” Policy
Mic. N.p., 15 Feb. 2015. Web. 5 Mar. 2015. .
All the while, the cost of tuition and fees has continued to increase faster than the rate of inflation, faster even than medical spending.
Martin, Andrew, and Andrew W. Lehren. “A Generation Hobbled by the Soaring Cost
of College.” The New York Times. N.p., 12 May 2012. Web. 2 Mar. 2015.
.