Saying the cold, hard facts on student loan debt are frightening is like calling the Grand Canyon a ditch.
There’s so much on student loan debt that this is going to be a three-part series.
In this series, I’m going to tell you which facts are real and why some so-called facts are absolute lies. I’ll also dissect some presidential hopeful’s plans for free education – and why that will never happen.
I’m going to tell you what the real problem with student loans is, why no one wants to hear the truth, and what to do to fix the massive problem the country’s really facing.
But first, today, I’m going to break down the facts about student loans, and the numbers might be shocking.
Student Loans by the Numbers
The total outstanding amount of student loan debt in America is now more than $1.53 trillion.
How much more? Hold on, let me go to the student loan debt counter running on a website I follow.
As I write, the total is $1,531,812,082,400. It goes up about another $9,000 every 2-3 seconds.
Student loan debt is much bigger than credit card debt, which, as of Q3 2018, was $840 billion.
It’s bigger than auto loan debt, which, as of Q3 2018, stood at $1.21 trillion.
The only category of consumer debt that’s bigger than student loan debt is mortgage debt. That, as of the end of 2018, amounted to $10.3 trillion.
One in four adult Americans has student loan debt.
That’s 44.7 million people out of the 171.3 million Americans ages 20-59, according to the Federal Reserve Bank of New York’s Consumer Credit Panel.
The oldest generational group with a huge student loan debt cross to bear is baby boomers – people over 50 years old, according to AARP this month, now owe $290 billion out of the $1.53 trillion pile.
That’s up from $47 billion only 15 years ago. Some of the rapid increase in baby boomers’ student loan debt comes from them taking out PLUS loans.
PLUS loans, the acronym stands for Parent Loan for Undergraduate Students, though students don’t have to be undergraduates anymore, are loans offered to parents of students enrolled at least half time, or graduate and professional students, at participating and eligible post-secondary institutions.
The average amount owed by bachelor’s degree recipients is $37,172. That’s the average for degreed students at the end of 2018, that’s up from $20,000 thirteen years ago.
We all know people with more than $100,000 in student loan debt, most of whom, at least the ones I know, earned at least one postgraduate degree.
The Federal Reserve Bank of Cleveland calculates the average monthly payment borrowers are saddled with at $393. They say that’s 55% more than 10 years ago.
Of all the student loans outstanding, 81% are federal loans and 19% are private loans.
According to the U.S. Department of Education: Direct loans, provided directly by the U.S. Department of Education and available to most students regardless of financial need, account for 77% of loans.
FFEL, Federal Family Education Loans, are indirect loans, provided by accredited institutions but guaranteed by the government, account for 22% of loans.
And Perkins loans, need-based loans of up to $5,500 a year for undergraduate students with very low household incomes (issued directly by the universities), account for a paltry 1% of loans.
The primary reason student loans are almost a necessity is that tuition costs have soared.
In 1971, the average cost for tuition room and board for one year at a public university was $1,410. In 2018 dollars, that would be $8,730.
I know that’s accurate, because I went to UCLA in the early 1970s and my tuition, not including books, was about $708 a year.
The following figures, all in 2018 dollars so we’re comparing apples to apples, come from the College Board’s website at collegeboard.org.
In 1971, the average cost per year for tuition room and board at a public institution was $8,730. Today it’s $21,370.
In 1971, the average cost per year for tuition room and board at a private non-profit university/college was $18,140. Today it’s $48,510, a year.
To put those numbers in some frightening perspective, in 1971 the cost of one year’s schooling ate up 15.6% of a median income household, which back then was $9,027.
Today, public university tuition room and board for a year, at $21,370, eats up 34.8% of 2018 (November 2018) median income of $61,372.
And people wonder why defaults are rising on outstanding student loans?
I’ll give you those numbers and tell you why on Friday, and I’ll get into what some Democrats want to do about the problem.
So, stay tuned…
P.S. – Student loan debt numbers aren’t the only ones that are shocking. There’s talk that a massive error has been made in many Social Security forms, leaving tens of thousands of individuals potentially missing over $20,000 rightfully owed to them. If you’re 50 or older, you could be one of them. Click here to find out.