This recent Huffington Post headline captured the march of shocking data about our growing societal burden: “12 Student Loan Debt Numbers That Will Blow Your Mind.”
Here’s a sample:
The student debt balance has hit $1 trillion and is still rising – it is now exceeded only by mortgage balances, according to the Federal Reserve Bank of New York;
Student debt is held by 26 percent of households headed by someone between the ages of 35 and 44, and 44 percent of under-35 households, and it’s concentrated in poorer households, according to the Pew Research Center;
80 percent of bankruptcy lawyers said student loans were driving more clients through their doors for relief.
It remains unclear where this era of student debt is taking society. Sure, college graduates will bring in another $1 million in earnings over a lifetime. But anyone who’s thought about it can’t help worrying this nationwide borrowing binge may end badly.
To help those grappling with how to pay for the fall semester, feeling the emotional fallout of debt, or trying to understand the larger issues, Squared Away pulled together some relevant blog posts published over the past 18 months.
Click “Learn More” below to read more. …Learn More
Adam Shepard estimates that it cost him $19,420.68 to circumnavigate the globe from October 2011 through September 2012.
It was a budget tour filled with simple pleasures and wild adventures for the failed professional basketball player and successful book author. He helped poor children in Honduras, hugged a koala in Perth, rode an elephant in Thailand, bungee jumped in Slovakia, and hung out in lots of places with Ivana, whom he met while traveling and later married (she brought only $12,000, so he paid for the food).
If he’d kept his bartending job in Raleigh, North Carolina, his car, and apartment, he estimates he would’ve easily spent more than $20,000 during that same year.
Petting a koala was on Shepard's international to-do list.
“If you wonder whether an odyssey like mine is financially realistic for you, I answer with a resounding yes,” he writes encouragingly in his new e-book, “One Year Lived,” which is being published today.
You’d have to read it to find out how he did it – and how energetic someone has to be to pull off an escapade through 17 countries. Shepard’s book is a strong reminder to those of us who burrow at our desks day after day that, as the saying goes, there’s more to life than money. … Learn More
A few more jobs reports like February’s might put a dent in the nation’s still-high unemployment rate. The Bureau of Labor Statistics said U.S. employment surged by 236,000 last month, nudging the jobless rate down to 7.7 percent.
But a summary of unemployment rates for various age groups, recently published online by the Urban Institute, showed variations in the rate, by age. Rates have been consistently lower over the past decade for older workers than for those in their 20s, 30s, and 40s – even during and after the Great Recession.
In a still-sluggish economy, one might wonder: are older workers who remain on the job somehow depriving younger adults of work?
There is “absolutely no evidence of such ‘crowding out’, ” concluded the Center for Retirement Research, which supports this blog, in a recent study analyzing the labor market from 1977 through 2011. To rigorously test this relationship, the researchers tried several statistical variations – even looking at the older-younger worker dynamic during the Great Recession. They kept getting the same result: no crowding out.
In fact, they noted that their own evidence and research by others suggests the opposite. When older people have jobs, they add to consumer demand and fuel the economy. The authors conclude that “greater labor force participation of older workers is associated with greater youth employment and reduced youth unemployment.”Learn More
Young adults, when asked if they have college loans, often just sigh or groan quietly.
But how much does this debt really matter to their lives? Conflicting trends make this difficult to answer. College graduates have ample time – decades of employment – to pay off their student loans, economists argue, and they’ll bring in more earnings to pay them back. A college education is worth $1 million in extra earnings over a lifetime.
Behind the student-loan sigh is anxiety that the post-Great Recession job market makes it tougher for many graduates to earn what they need to pay their loans back. Indeed, the rate of delinquencies has risen in tandem with increased borrowing. Payments on half of all student loan accounts are now being deferred, the consumer credit firm TransUnion reported last week, and these deferrals are the first step to still more delinquencies.
Some researchers are warning about the additional financial risks facing graduates with large loan balances. “That didn’t happen in previous generations,” said Ohio State University’s Lucia Dunn, whose study published last month in Economic Inquiry found that young adults are on a path to having far more credit card debt in middle age than did their baby boomer parents. Credit cards, student loans – debt of all kinds – she said, “is just an overwhelming burden for many young people.” … Learn More
Women with large student loan balances are less likely to marry than their girlfriends who’ve graduated debt-free, new research shows.
Men, in contrast, are immune to this impact. Their marriage prospects are the same regardless of how much they owe for their education, according to Fenaba Addo, who studied the effect of college and credit card debt in the “marriage market.”
As U.S. college debt outstanding has surpassed the $1 trillion mark, the fallout is widening. Recent graduates complain that paying off their student loans affects their ability to take critical steps to improve their future finances, such as buying a house or saving for retirement. But there are psychological effects too: young adults who carry a lot of debt, for example, are more stressed, even depressed.
It was only a matter of time before student loans started messing with their love lives.
Addo, now a post-doctoral fellow at the University of Wisconsin’s Department of Population Health Sciences, became interested in the topic as she watched her girlfriends taking on “crazy amounts of debt” to finish college or complete graduate degrees… Learn More
As delinquencies by college graduates have increased, so have their personal financial risks: 15.1 percent of loans originated in late 2010 are now delinquent, up from 12.4 percent of late-2005 loans, according to a January report by FICO, creator of the credit score. More students are also delaying their loan payments.
“This situation is simply unsustainable,” warned Andrew Jennings, head of FICO Labs. “When wage growth is slow and jobs are not as plentiful as they once were, it is impossible for individuals to continue taking out ever-larger student loans without greatly increasing the risk of default.”
American Student Assistance (ASA) is a non-profit that helps college graduates with the complex task ofmanagingtheir loans. Debtpreventionis the best course of action, and an increasingly urgent one for students. For those who are already in debt, clickherefor how to call an ASA counselor. Click “Learn More” to read a May 2011 article about ASA. …Learn More
To get a grip on retirement worries, overwhelming student loans, or squeaking by, it always helps to get more money or make a plan.
But finding a way to think about how to manage your money is also useful. It’s like making music, says Timothy Maurer, a Baltimore financial planner. At first, you have to master the “boring stuff, but eventually real songs start being produced.”
p.s. Maurer said that his brother Jon Maurer, who is “a far more accomplished musician than I,” is the pianist in this video.
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