Student loan debt is now more than credit card debt

Student loan debt — totaling more than $800 billion — outpaced credit card debt for the first time last year and is likely to top a trillion dollars this year, the New York Times reports.

“In the coming years, a lot of people will still be paying off their student loans when it’s time for their kids to go to college,” Mark Kantrowitz, publisher of FinAid.org, told the Times.

Two-thirds of bachelor’s degree recipients graduated with debt in 2008, compared with less than half in 1993, the Times writes. Last year, graduates who took out loans left college with an average of $24,000 in debt.

The mountain of debt is likely to grow more quickly with the coming round of budget-slashing, the Times writes.

In Georgia, cuts in the HOPE scholarship program will mean increased borrowing costs for many students in the future. And federal Pell grants for low-income students are expected to be cut, the Times writes.

Some education policy experts told the Times that the mounting debt has broad implications for the current generation of students.

“If you have a lot of people finishing or leaving school with a lot of debt, their choices may be very different than the generation before them,” Lauren Asher, president of the Institute for Student Access and Success, told the Times. “Things like buying a home, starting a family, starting a business, saving for their own kids’ education may not be options for people who are paying off a lot of student debt.”

What’s your situation or what will it be?

Have you changed your college or career plans for financial reasons? For example, is going to a technical college to learn a trade more appealing than it was a few years ago?

Are you trying to keep things in perspective by looking at the long-term value of a college education? Or is the tough job market for graduates in recent years changing your view?

- Henry Unger, The Biz Beat

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123 comments Add your comment

TnGelding

April 12th, 2011
5:52 am

It’s a national disgrace. It has implications for our economy as well. If we truly valued education we would find a way to pay for it. Haven’t we spent more in Iraq?

Destin Dawg

April 12th, 2011
6:57 am

these kids need to work their way through school… like we did back in the day… find scholarships.. live at home and go to Junior college or tech or trade school… NOT get a degree in NOTHING… like liberal arts/history/english/creative writing….. we need math/science/medical/engineers… Don’t borrow $$$ to get a degree that will not lead to a career !!!!

Time to wise up

April 12th, 2011
7:04 am

The problem is that Universities have transformed from places of higher education to factories over the last 20 years. The Hope scholarship helped usher in the false assumption that all high school graduates should go to college, and Universities fed off that by letting more kids in and rapidly expanding the salaries of Presidents and the on-campus facilities.

The United States still needs skilled labor, and yet there is none anymore, because kids who used to take shop as seniors and went to apprentice with a skilled worker right out of college have been seduced by the idea of getting a college degree. So instead of starting to work a well-paying job at 19 years old, they go to Kennesaw State, flounder around for 6 years, get a worthless degree in psychology and have $70,000 in student loan debt.

There are lots of kids out there who are 23 years old, have worthless “degrees” and massive loan debts that they will never be able to pay off. But hey, at least Kennesaw State was able to raise student fees to $120 a semester to field a football team.

We need to fundamentally re-train guidance counselors to start letting kids know that not everyone should go to college. It is a false promise that is being propagated by higher education to continue to pay the salaries of the university presidents and athletic department heads.

Wake up America, you are being scammed.

Wished I would have known

April 12th, 2011
7:18 am

I totally agree with Time to wise up. I wished someone would have told me that 20 years ago that I should have gone to Tech school and got a trade as oppose to going to college. I graduated with a worthless degree and $10,000 in student loan debt. I am not allowing my kids to make the same mistake.

free

April 12th, 2011
7:23 am

bachelors and masters: $60k debt. and i worked while in school!

Julie

April 12th, 2011
7:29 am

I had a scholarship for full tuition, plus I work during school and I still have $30,000 in student loans just for the cost of living during that time. I have a good job, but not one that I enjoy, and I can’t change careers because I need to make as much money as I do to support my debt. Debt is completely running my life and making all my decisions for me. I wish I would’ve gone to a trade school, but my parents wanted me to have a degree. Now I have to suffer for it.

Time to wise up

April 12th, 2011
7:29 am

I would also like to add that our grade schools/high schools need to start including a personal financial education component.

If a 16 year old starts to understand what $25,000 in debt at 5.5% can do to their financial well-being, they will not be making those poor decisions as young adults.

Jeff Costa

April 12th, 2011
7:34 am

Peter Thiel just covered this.

We’re in a Bubble and It’s Not the Internet. It’s Higher Education.
http://techcrunch.com/2011/04/10/peter-thiel-were-in-a-bubble-and-its-not-the-internet-its-higher-education/

Sue

April 12th, 2011
7:39 am

Destin Dawg and Time to wise up got it right! (Except for the part about having a degree at 23–many students at 23 are years from that!)

The education bubble needs to go ahead and bust.

HOPE turned out to be a curse rather than the “Jewel” some claim it to be since the schools’ response to it was to jack up tuition and fees accordingly along with going on building binges and inflating the salaries of presidents .

And student loans: the schools are ready and waiting to shove them down the throats of foolish, gullible students who should be working and paying their own way.

Why aren’t the schools being held accountable for this as well as for their poor graduation rates and unemployable graduates. Statistics should be available for each school listing the employment statistics, salaries, etc. for each major. Why go to college for 4+ years, waste parents’ money, and run up big loans to work behind a fast food counter or worse yet, have no job at all?

Cindy

April 12th, 2011
7:44 am

We have a child who is currently a sophomore in public college on Hope. Even with Hope it will cost over $8000 next year out of pocket with her living on campus, meal plan, fees/things not paid by Hope. The schools now don’t have many scholarships for people who aren’t athletes. We refuse to allow her to borrow more than we know she can comfortably pay once she graduates which means that she will not be going to school this fall as she will have to sit out and work as we don’t have that kind of money to give her (but can help her some). It won’t hurt her. Both my husband and I worked our way through college and each of us took more than the “traditional” 4 years to graduate. That’s part of the problem – the federal loan system allows people to borrow money for careers that won’t pay much (if they’re lucky to get a job with this economy) instead of telling these kids “no, you need to pay for your schooling and not borrow so much.”

Kat

April 12th, 2011
7:47 am

@Time to wise up – absolutely there should be a personal finance education class in the high schools. And, the parents of the high-schoolers should teach it – similar to Junior Achievement with real-life examples and pitfalls. Tell them the truth, as they are going to need it.

I was fortunate to have no debt after graduating from college (fortunate = working my way through plus scholarships). If employers didn’t “demand” a college education as a screening tool (and most jobs DO NOT need one, especially where an apprenticeship/internship would suffice), many people wouldn’t be drowning in debt.

Bill

April 12th, 2011
7:49 am

Destin Dog,

1) It is hard to work you way through school when there are very few jobs available. When I was young, you could work a job at or near the minimum wage, make enough to live and pay tuition. Today, that minimum wage job at 40 hours a week would barely pay tuition.

2) A university education was never meant to be job training. There is great value in a liberal arts education – for the individual and for society. If all you are looking for is job training, then you are right, go to technical school.

Mercer

April 12th, 2011
7:57 am

Dear Destin Liberal Arts Degrees are not crap! I would love to see you go through this 4 year program at a traditonal college. This program is 10 times as hard as a reagular Teacher Education degree. With a Liberal Arts Degree I can go on to gradute school and get any degree that I want. I am not pigon hold into getting an useless business degree or an social health degree. Plus if your goal is to work in Corporate America a lot of bosses look for critical thinking skills and good writing skills. You can not learn this in a regular degree program. So getting a Liberal Arts degree is not a waste of time. I am so tired of small minded people thinking this is just a fluff degree. Now granted I went to Mercer and I work full time and I am still leaving school 55K in debt but, atleast I have a degree that I am proud of and can use on a daily basis. According to Suze Orman school debt is healthy debt because it shows that you are trying to better yourself.

Bill

April 12th, 2011
7:59 am

Time to Wise UP,
As a former apprentice and skilled tradesman in manufacturing, please tell me where this demand for skilled trades exists. The apprenticeships you mention have nearly disappeared over the sat 30 years.

$70,000 in student debt or Kennesaw State? Total cost including living expenses is around $12,000 per year. You did read the part where the average debt nationally is about $24,000. I have a daughter graduating from Emory, and her debt will be right at the average.

I agree with you that universities should not prioritize things like football and apartment style living, but that is not the source of the problem. Faculty and administrative salaries are not the problem either, although some administrative position could probably be cut. These salaries in Georgia are below the national average. State Funding for higher education has endured drastic cuts year after year. That is primarily what has fueled tuition and borrowing increases. A public burden has been shifted to twenty year olds.

Tom

April 12th, 2011
8:02 am

Time to wise up is absolutely correct. Guidance counselors have been told by administration dunderheads to tell all students to go to college. What a load! The world needs plumbers, electricians, welders, carpenters, and auto mechanics a lot more than it needs another college graduate with a degree in African studies or women’s studies. Has anyone with such a degree ever got a job in either of those fields? Do those fields even exist?

Bill

April 12th, 2011
8:03 am

Sue, AJC recently published an article that studied the tuition increases in Georgia after HOPE was implemented. Tuition in Georgia went up more slowly under HOPE than it did in the rest of the country. The notion that these institutions raised tuition to take advantage of HOPE is a fallacy. The reason for the increases in tuition is primarily the decrease in state funding. We used to view a college education as a public benefit – all of society benefited when someone was educated. Now, we view it as a private benefit – individual job training, with a focus on ROI.

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Bill

April 12th, 2011
8:08 am

Tom,
Actually, there is demand for welders right now, and to a lesser degree auto technicians. Plumbers, carpenters and electricians are likely to have a harder time given the surplus stock of houses.

Leslie

April 12th, 2011
8:19 am

Just b/c you go to a liberal arts college, doesn’t mean you have a “worthless degree”-hello.
I have a liberal arts degree, an a good job, and am still struggling to move on in my life to have children,etc b/c of prohibitive student loan debt-and that is after 2 years of community college, before transferring. My husband is a nurse, one of the most in-demand jobs right now, so we are both employed in good jobs, and having trouble moving to the next level in our future b/c of the more than $500/month in school loan payments, and we don’t carry almost any other debt, incl CC loans.
Don’t blame it on liberal arts education, blame it on the money making, greedy financial institutions that are ruining our country, and driving up debt. But what else is new?

Uncle Sam

April 12th, 2011
8:33 am

Join the military and have Uncle Sam pay for your education! I served 4 years in the USAF and completed 2 years while on active duty (for free!) I have a BS, Masters, and Specialist with ZERO debt/college loans. The time spent in the USAF was very valuable, too!

steph

April 12th, 2011
8:33 am

I’ve got over 11 years experience working in my field and recently my company hired another indivdual to work in the same capacity I am working in. This individual is a recent college grad, has no experience but is making $10k more than I am simply because he has a degree. Corporate America demands these degrees – they value degrees over experience! Thankfully, I am graduating college soon and although I will have $30k in student loans, I will be able to use my degree to position myself for a higher position with more responsibility.

steph

April 12th, 2011
8:38 am

@Uncle Sam…I too was in the military and if you’re receiving the Post 911 GI Bill, I would agree with your comments. If you were under the Ch 30 Montgomery GI Bill, I would disagree as there was a monthly cap on those educational expenses. They did not pay for housing, books or any other fees. My tuition exceeded the monthly payment from the VA and I had to take student loans out to cover the portion the GI bill did not cover.

electrician

April 12th, 2011
8:42 am

Bill…there is still a demand for electricians,Just not the ones that only wire houses,industrial electricians like myself that are trained in the repair and maintenance of industrial machinery are still in demand, and a lot of us are rapidly approaching retirement.its a 2 year course taught at most technical schools.spread the word to the young folks.

Mercer

April 12th, 2011
8:43 am

@Steph you are right. That is why I went back to school. Unless you work for a small private company that promote people who kiss their butt then you will need a degree. If you don’t have a degree in Corporate America you might as well just get use to seeing people move ahead you and making more money than you with no experience…. been there and got the T-shirt with matching leggins…

Elliot Garcia

April 12th, 2011
8:45 am

It’s time for you to wise up! All the skilled labor jobs have been shipped to China and Brazil. There are no more factory jobs in the U.S. Get a degree in math, finance or computer science or pay your college tuition back for 20 years…..

Biz

April 12th, 2011
8:48 am

Living in DC… Graduated from Tech Mechanical Engineer 06… 22K in student loan debt… I was actually pretty satisfied with amount. I’m down to about 17.5K now paying roughly $160 a month. I agree with the “worthless degree” statement – it’s an unfortunate and sad reality… BUT your degree is only worth what you are worth as a person in the working world. I just think that in the end people have to evaluate themselves to what they think they can do. I have a few friends with twice the student loan debt and no degree (drop outs after 5+ yrs of messing around) or the not so hot degree because they are lazy (environmental marketing). There are a bunch of people that you could blame for not getting your kids a job or them having too much student loan debt… but when does the person stop and say… “I have to do what’s best for me regardless of the conditions”. Everything is all good until it goes bad.

Destin Dawg

April 12th, 2011
8:52 am

Mercer… more school ?? grad degree in what ?? more debt ???? what kind of a job/career path do you have ???? a friend of mine’s son graduated Mercer… recently… he’s bar tending

GT student

April 12th, 2011
8:53 am

In my case and many others, the education is worth the debt, but I am an engineering major. Most likely after graduation I will be hired for a job paying $50+K. Georgia Tech is definitely one of the best values there is, even if I’m $20,000 in debt after 2 years with HOPE…

Biz

April 12th, 2011
8:53 am

to elaborate on the “worthless degree” comment… Some degrees require a little more footwork outside of school. Some degrees don’t. I got a job opportunity weekly as student at tech. Some I didn’t qualify for some I just wasn’t interested in. I have friends that went to schools across the state of Georgia that didn’t have that opportunity because their school didn’t give them that chance or their degree didn’t give them that chance. At that point its up to them to step up to the plate and fight for their place in the working world – it just is what it is.

Kelly

April 12th, 2011
8:54 am

All of these “ONLINE DEGREES” are worthless–those are such a SCAM! People who are lazy and do not want to work LOVE these schools bc they can sit at home and do nothing, and live off of the loans they receive. After they graduate with their WORTHLESS degree, they certainly cannot pay for their astronomical loans!

Destin Dawg

April 12th, 2011
8:55 am

and yes.. you can get a degree by joining the military.. better than student loans !!

Buzz G

April 12th, 2011
8:55 am

I worked my way through college in the late 1960s in a vegetable canning plant. The plant was staffed almost entirely with college students. As a result, I graduated with no debt.
Today that canning plan is still running. But it now runs on illegal alien labor. Local college students can no longer find summer jobs, so they borrow the money.

We need to throw out the illegal aliens and free up the jobs for our kids. And any politician, Democrat or Republican who gets in our way, needs to go. Go Tea Party!

Mercer

April 12th, 2011
9:01 am

Destin it sounds like your friend didn’t visit the career center at Mercer… Right now I work for an excellent State University college so I can go to Grad school and beyond for free…. so you bet I will be taking advantage of this service……

keith

April 12th, 2011
9:01 am

Right on, Destin Dawg. I worked two jobs and went to school in the 70’s to complete my degree. Got married in my last year and carried a full load and worked 40+ hours/wk. It wasn’t easy at all, but it was possible.

Eggergrl

April 12th, 2011
9:04 am

Too many people are going to schools they cannot afford and taking out massive amounts of loans that they hope someone else will pay for. Taxpayers beware, it will become your problem when the default rate rises even higher! Students need to look at local colleges. Your tax dollars are already subsidizing these schools.

Dr. Phil

April 12th, 2011
9:05 am

The real outrage concerning federal student loans is not so much those who graduate, but those who enter two and four year colleges under open admission with no intention of graduating or of repaying federal loans. Many students and parents see the college experience as an entitlement. A student taking remedial courses can remain in college for three semesters, receiving Pell Grants and Stafford Loans, and colleges in Georgia are happy to accommodate them. Georgia colleges presently have an administrative division with the sole purpose of obtaining grants and loans for students. Smaller colleges thrive on this source of tuition and fee income. Thank Sonny Perdue and his hand-picked Board of Regents for eliminating entrance requirements for two-year colleges. Likewise, private technical colleges exploit financial aid, promise job placement, and crank out graduates with huge debts that are essentially unemployable. The public and Federal Government must hold the Board of Regents responsible for financial-aid management and demand academic progress of students and require higher graduation rates for two and four-year colleges. Raising admission standards would be a good start.

Nick

April 12th, 2011
9:07 am

Colleges and universities are simply ripping off the students! In 1971 as an out of state student attending a small school in MD my annual cost of attendance was $1800. Now, an in-state student would be hard pressed to get into that school for $18,000. How come? How did the cost of a college education increase more than: clothing, housing, energy costs, etc?

The Baroness

April 12th, 2011
9:07 am

Destin Dawg and Time to Wise Up: 100% correct!!

Homer

April 12th, 2011
9:09 am

I graduated from UGA with a Business Ad degree in 1976. The employment rate was as bad then as it is now. I was fortunate to find a job in a K Mart as an assistant manager. At that time GA Tech grads with EE and Aerospace degrees were working in similar retail environments. In the early ’80s I made the decision to get some technical training and I have been gainfully employed ever since.

The difference between 1976 and 2011 is that we didn’t graduate with a lot of debt. College was affordable and most parents could afford to pay the tuition. I feel sorry for today’s grads because of the debt. Enjoy the little bit of disposable income you have. Things will get better.

Destin Dawg

April 12th, 2011
9:09 am

Mercer what grad degree are you planning ??

Homer

April 12th, 2011
9:12 am

Buzz G, explain to me how you can can vegetables and text at the same time. IIllegal aliens aren’t the issue. Get off your soapbox.

AJANI

April 12th, 2011
9:15 am

I am a counselor and tell my kids everyone can go on to higher education but that the definition of that has changed. Higher education is anything beyond a high school education. Trade schools, junior colleges, 4yr colleges & universities and certification programs are all types of higher education. Many certification programs can now be completed while in high school. A complete guidance of ALL options should be available to kids and they should select their paths in life. I tell kids to start researhing scholarships in middle school don’t wait until junior year and try to figure a finiancial plan because you will have debt. Planning is the best tool to help students in the future not guessing which degree is better.

Mercer

April 12th, 2011
9:16 am

@Destin either I will pursue a Computer Information Systems degree or an Middle-Secondary Education & Instructional Technology

Cdawg

April 12th, 2011
9:17 am

I took out student loans for my education but I also worked while in school to help pay the bills. I graduated 19 years ago and back then student loans were hard to get and there were tight limits on how much you could borrow. I don’t know if any of that has changed personally but it seems like it has. For me loans covered what grants and paychecks wouldn’t cover. I had manageable debt after school and payed it off over 10 years. Not sure if I could do today what I did back then. Back then and today I always believed and I think I saw a study one time that agreed, the federal government would save money and help more people giving grants instead of backing loans. Course there is no money to be made in grants.

tar and feathers party

April 12th, 2011
9:18 am

The “Five Year Party” clowns are complaining about the cost of the party? Too bad, pay up, deadbeats!

sven

April 12th, 2011
9:19 am

Every parent today thinks their kid is special and brilliant. Wrong. Most of them are fat and stupid.

commoncents

April 12th, 2011
9:26 am

My parents and I knew college would be expensive. I kept my grades up and kept HOPE while working at the same time, and they worked hard and saved what they could to pay for the rest. The end result? I graduated debt free.

My room mate spent six years at the same school, never graduated, and also racked up 60K in student loans that his parents kept co-signing on. What did he get out of all those loans? A flat screen tv, xbox, video games, and large bar tabs. (he has since joined the armed forces to pay back the debt. first paycheck he got, he bought a new truck)

College is not for everyone, and it is not cheap. No one is entitled to it

lars

April 12th, 2011
9:28 am

sven,

Spot-on. Americans vote against their own self interest for tax cuts for billionaires. Meanwhile, in Europe we provide free education, healthcare, and 8 weeks paid vacation. Socialism rocks, capitalism is slavery.

MackyO

April 12th, 2011
9:29 am

I did not choose to go to college, as I was so over how awful my GA high school was, I couldn’t stand the thought of continuing on the same path of crushing students down to the least common denominator. That being said, I studied on my own, bought books, spent hours upon hours at home learning new technical skills, and recently was making over 90K a year.

I’ve watched time and time again new people came into our office right out of college with Psychology degrees, Political Science degrees, and English degrees, and you know what they were doing? Accounting. Yes, the only job they could find was was punching check amounts into a computer. Plus, almost every one had the work ethic of, “I graduated, so pay me”, and they were the first ones at our small-mid sized business to say consistently, “that’s not my job” whenever someone asked them for help.

Judge Smails

April 12th, 2011
9:31 am

The world needs ditch diggers too……….