Boy, the latest statistics on student loans are pretty shocking. I’m glad I got through college back when tuition was relatively low and there were still good jobs waiting for you after graduation day. USA Today reports that borrowing for higher education occurred at a record pace last year and total outstanding debt reached an important new milestone.
The amount of student loans taken out last year crossed the $100 billion mark for the first time ever and total outstanding student loan debt will exceed $1 trillion for the first time this year.
Americans now owe more on student loans than on credit cards, reports the Federal Reserve Bank of New York.
Students are borrowing twice what they did a decade ago after adjusting for inflation, the College Board reports. Total outstanding debt has doubled in the past five years — a sharp contrast to consumers reducing what’s owed on home loans and credit cards.
Taxpayers and other lenders have little risk of losing money on the loans, unlike mortgages made during the real estate bubble. Congress has given the lenders, the government included, broad collection powers, far greater than those of mortgage or credit card lenders. The debt can’t be shed in bankruptcy.
The credit risk falls on young people who will start adult life deeper in debt, a burden that could place a drag on the economy in the future.
While this is surely part of “The New Road to Serfdom” here in the U.S. or, more simply, “wage slavery”, as noted in the article, it is true that the unemployment rate for those with college degrees is less than half of what it is for the rest of the population. For many marginal college prospects, this amounts to a high-stakes roll of the dice as to whether it makes sense to take on so much debt.