As if there isn’t enough doom and gloom in the economy, USA Today Newspaper has undertaken a research project to find out how much debt college students are amassing as many of them fail to find employment to help them pay their college bills. Financial columnist Dennis Cauchon reports that for the first time ever, college student loans crossed the $100 billion mark and total outstanding loan debt will hit $1 trillion dollars; a feat never before achieved in this country.
These numbers are worrisome because they represent several serious issues for the economy and for the future of many Americans. First, such high numbers indicate that an awful lot or college students have been unable to find jobs to help them pay their way through school. Second, because these types of loans are not the kind people can get rid of via bankruptcy, etc. it means, they will be paying them off during the early parts of their careers, which means, they won’t be able to contribute to retirement accounts. This in turn will put them at financial risk later in their lives, and worse for the country, will put an added burden on the social security system.
What’s worse, many of those students who have recently graduated, or will be soon, won’t find employment, which means they’ll likely be moving back home, dumping the burden of paying off those loans onto their parents, which is certainly not good for them. But, it’s also worse for the country because it means that money won’t be spent on consumer goods which is what is needed to get the economy going again.
The research team also found that current student borrowing is nearly twice what it was just a decade ago, a worrisome sign if ever there was one. Especially problematic is that many of those spending all that money on college will find it won’t help them get a job. The USA Team found that full-time undergraduate students borrowed an average $4,963 last year, up 63% from just ten years ago. It’s not hard to see where this is heading when you consider that would mean almost $20,000 of debt when the average student graduates. Not exactly the best way to start a career.
Currently, the federal government, sponsor of such student loans doesn’t appear to be slowing down in handing them out because of the expectation of getting the money back. For some though, that might not be the case, because some of those students many never make enough to pay off those debts.