Student Debt Hurts Household Wealth For Decades
Career College Central summary:
Newly minted college graduates, about to exchange their caps and gowns for (if they’re lucky) workplace attire, are about to encounter a stark division that will follow them for a good part of their adult lives. A new report from the Pew Research Center underscores the stronger financial footing of young college-educated Americans who don’t have any student debt compared to the position of their peers with student debt.
On average, households headed by young Americans (which Pew defines as under 40) without student debt have about seven times the net worth ($64,700) as those with student debt ($8,700). There’s virtually no difference in income between these two groups of college-educated Americans. But the relative size of an apartment, or the kinds of vacations that are affordable, sometimes has little to do with the numbers on a paycheck in those early years and a lot to do with how much of that paycheck gets pocketed (not to mention extra, familial sources of wealth).
As the only kind of debt that rose throughout the Great Recession, student debt became second only to mortgages as the largest type of debt owed by American households by the end of 2009. Nearly 40 percent of households headed by a young adult had student debt in 2010. What they owe, of course, ranges, but the median level left to be paid off is around $13,000. In 2001, only 22 percent of households headed by young adults had outstanding student debt.
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