The class of 2011 is the most indebted ever. The average student debt is now $22,900.
Of course the class of the current year is always the most indebted ever. This is like saying that the average college cost is the highest it’s ever been. That’s true; it’s just not much of a surprise.
Even as the average U.S. household pares down its debts, the new degree-holders who represent the country’s best hope for future prosperity are headed in the opposite direction. With tuition rising at an annual rate of about 5% and cash-strapped parents less able to help, the mean student-debt burden at graduation will reach nearly $18,000 this year, estimates Mark Kantrowitz, publisher of student-aid websites Fastweb.com and FinAid.org. Together with loans parents take on to finance their children’s college educations — loans that the students often pay themselves – the estimate comes to about $22,900. That’s 8% more than last year and, in inflation-adjusted terms, 47% more than a decade ago.
Whitehouse offers a familiar caveat to these numbers: “in the long run, the investment is probably worth it.” Education is a solid investment.
Well fine, but isn’t it a serious enough investment of time and effort, without the financial strain? While it might be more responsible to borrow to pay for college than to buy houses or consumer goods, the debt terms are actually worst. “Student debt can carry interest rates as high as those on subprime mortgages, and it’s much harder to shed in the event of trouble.”
Oddly, as other debt decreased 8 percent across the country in the last three years, student debt rose almost 30 percent.
Sure it’s a good investment, but it’s not nearly as good as it could be.