US student debt has grown at a rate of 20% over the past ten years, leaving college graduates with heavy payments.
In the United States, the student debt ratio is increasing by 7.8% each year, turning into a crisis of 1.7 trillion dollars.
How many Americans have student loan debt?
Student loan debt in the United States is a growing crisis, with college graduates facing a total of $1.75 trillion in student loans.
In 2022, an estimated 92.8 million Americans have student loan debt, according to Education Data.org.
Part of the reason debuts are so high is due to inflation, which has increased the cost of college by 602.5% since 2000, according to the Education Data website.
Another issue that weighs heavily on the student loan crisis is the degree obtained.
In recent years, a master’s degree is now considered to have replaced a bachelor’s degree, with more jobs requiring advanced training to be hired or promoted in a job.
For those age 25 and older, about 13% went on to further education to earn their master’s, which resulted in an average of $71,287 in additional student loan debt.
What Did Joe Biden Do About Student Loan Debt?
Since taking office, President Joe Biden has repeatedly spoken about student loans.
He even went so far as to suspend payments four times to help provide relief to Americans who have been financially impacted during the Covid-19 pandemic.
However, he is yet to make a decision on the most recent break, which is due to expire on September 1, 2022.
While many have offered to forgive $50,000 per borrower, there have been reports that he plans to forgive $10,000 per borrower, according to The Hill.
The Hill went on to note that since Biden took office, about 1.3 million borrowers have seen $25 billion in student debt forgiveness.
Why has the cost of college increased so drastically?
At the turn of the millennium, the average American who graduated with a bachelor’s degree racked up student loan debt of about $17,297, about $13,000 less than the average debt in 2021.
The student debt crisis took hold during the 2008-2009 recession, prompting students to cross the $1 trillion threshold in student debt.
Since 2000, the country has seen a 76% growth in student debt upon graduation.
Forbes reported last year that tuition for a college education is vying for the top spot for rising costs, just behind hospital care.
University tuition fees have even increased faster than the cost of housing, child care and medical services over the past twenty years.
As more and more students pursue a college education, the cost comes down to supply and demand, with more and more students taking out student loans in the hopes that it will benefit them in the long run .
Nicole Smith, chief economist at the Georgetown University Center on Education and the Workforce, spoke to CNBC last year to explain the reason for the general rise in lending.
“People who went to school in the 70s and 60s actually paid for their education while working. They would take summer jobs and pay their tuition,” she said.
“And by the time they graduate, they’d be debt-free or just a few hundred dollars, a few thousand dollars to get by, they pay that off in a few years and get on with their lives.”
She said that in 2020, about 30% of students have defaulted on their student loans, are behind on their payments, or have stopped making payments altogether.
This results in students falling behind as they pass through life milestones such as getting married, buying a house, and having children.
Smith said: “…If you think of student loan debt as negative wealth, as money that could have been used to save for wealth or to buy a house or to invest in the stock market to accumulate wealth, this potential wealth is now being used to repay the loans.”