Student Loan Debt Reduces Lifetime Wealth

Career College Central summary:

  • A new research report on America’s still-growing student loan debt found that its financial effects can last a lifetime. According to Demos, a national, nonpartisan public policy organization, 39 million Americans have used student loans to fund college education. An education debt of $53,000 will lead to a $208,000 lifetime loss of wealth.  If current student borrowing trends continue, student debt will reach $2 trillion by 2025. Additionally, a $1 trillion in outstanding student debt will lead to a total lifetime loss of $4 trillion for affected households.
  • Lost lifetime wealth, according to the report, will reduce two-thirds of retirement savings by $134,000 with the remaining third being lost from lower accumulations in home equity. Demos attributes these wealth losses to loan repayments and the amount of time required for repay them in full have on savings and delays in buying a first home.
  • The report warns of the risks that spiraling student loan debt has on the nation’s economy.“Student debt’s financial impact won’t just be felt by the nearly 39 million Americans who currently have student loans,” states the report, “the drag of student loans on indebted households’ purchasing power and ability to save will slow an already-sluggish growth for the entire U.S. economy. If we wish to avoid this fate, we need to take immediate action to both reduce the burden of existing student debt and prevent future debt from piling up even higher.”
  • Other key findings show:

    • Nearly 80 percent of black students in the class of 2008 graduated with student debt averaging $28,692, while student debt for white graduates occurred with 65.6 percent and at a reduced debt load of $24,692;
    • Approximately 75 percent of students earning Bachelor’s degrees from families earning less than $60,000 incurred debt; by comparison, students earning the same degree from families earning more than $100,000 incurred debt at a rate of 45 percent;
    • Students enrolled in private for-profit schools incurred the greatest average debt at $33,050; followed by private, non-profit schools with an average of $27,650 in debt;
    • The lowest student debt was incurred at public universities with an average of $20,200.

Click through for full article content.

THE ST. LOUIS AMERICAN
 

Leave a Reply

Be the First to Comment!

Notify of
avatar