Student loan debt ballooned from $550 billion at the beginning of the recession to $1 trillion at the beginning of this year.
Two-thirds of recent college graduates are carrying student loan debt according to a new Congressional report issued by the Joint Economic Committee.
These borrowers had an average student loan balance of $27,200, which is 60 percent of the yearly average weekly earnings of college graduates.
Student loan debt, the report finds, is the only type of consumer debt that continued to rise during the recession and prolonged economic recovery, increasing from $550 billion to $1 trillion at the beginning of this year. It is represents the biggest aggregate balance among non-mortgage debt categories.
A recent Hamilton Project report found that education corresponds to better and more varied employment opportunities. According to April 2013 data from the Bureau of Labor Statistics, the unemployment rate for college graduates with a bachelor’s degree or higher was 3.6 percent, compared with 11.4 percent for workers age 25 and up without a high school diploma, The employment rate for grads with a bachelor’s degree was 73.2 percent vs. 39.9 percent for those without a high school diploma. The report further stated that those with a bachelor’s degree earn roughly $30,000 more each year than those with a high school diploma.
“The potential for higher earnings and broader job prospects has spurred more Americans to pursue secondary education,” the new congressional report notes. But at the same time, college tuition has also risen, forcing more students to rely on student loans. Over the past two-and-a-half decades, both the percentage of students taking out loans and the average amount borrowed has increased “substantially.”
Subsidized federal Stafford loans, which accounted for more than one-third of all student borrowing for the 2011-2012 academic year. Congress faces a July 1 deadline to stop the interest rate on these loads to double from 3.4 percent to 6.8 percent. The rate increase would raise the cost of interest by $4,500 for students who borrow the maximum amount allowed
"Allowing the interest rate on subsidized Stafford loans to double at a time when the government’s cost of borrowing is so low undermines the public policy objective of providing affordable loans to students," according to the report, and by $2,600 for the average borrower, the report states.
Donald Liebenson writes news and features for Millionaire Corner. He has been published in the Chicago Tribune, The Chicago Sun-Times, The Los Angeles Times, Fiscal Times, Entertainment Weekly, Huffington Post, and other outlets. He has also served as a marketing writer for Chicago-based Questar Entertainment and distributor Baker & Taylor.
A graduate of the University of Southern California, he is married with a college-age son. He also writes extensively about entertainment.