Although the mortgage crisis that led to the Great Recession was much larger than the potential default level on student debt, risks to the financial system are real. Meanwhile, if a sufficient number of people with student debt default, this could lead to a crisis in the educational financing system. The simple presence of student debt reduces an individual’s net worth and disposable income, driving down consumption and investment spending, and places downward pressure on the economy (Fullwiler et al. The second issue concerns the inability of students to repay their loans. If a sufficient number of people decide that the risk associated with debt outweighs future earning potential, the human capital that a modern competitive economy requires may be at risk. Rising default rates may also contribute to a greater perception of risk associated with student loans. Burdman ( 2005) argued that rising student debt loads may be a barrier to access for those who are averse to borrowing. A study of willingness-to-borrow for higher education found that students from schools with lower resources are less likely to borrow funds for higher education (Perna 2008). In a 2014 survey, 34% of former students age 18 to 40 with outstanding debt believed that their investment in a college degree will not pay off in the long run (Citizens Bank 2014). But some are questioning the risk-reward calculus of taking on significant debt to obtain a college degree. Individuals planning on attending higher education institutions who lack funding must borrow.
Over the long term, investing in higher education can have significant impacts on earning potential. Assuming a 40-year working life, the difference in median income between a person with a high school degree (or GED) and a Bachelor’s degree is $930,200.
#ALUMNI STUDENT LOAN DEFAULTS RANKINGS PROFESSIONAL#
The most recent data from the American Community Survey (2018 five-year estimates) shows that median income for persons with less that a high school degree was $22,609, rising for those with some college or an Associate’s degree ($36,293), Bachelor’s degree ($53,825) and a graduate or professional degree ($72,095). First, higher education is increasingly considered a necessity in the modern labor market and people with higher education tend to be more productive, which is reflected in greater wages and salaries. This growth in student debt has raised several issues that may affect the economic competitiveness of the U.S. Although the community-level impacts discussed here may contribute to that narrative, this study seeks to provide communities with insight and strategies to address the concern locally.
#ALUMNI STUDENT LOAN DEFAULTS RANKINGS FULL#
Concerns over this rapid growth and the subsequent impacts on individuals have led some national policymakers to call for full absolution of existing student debt. Based on analysis by the Institute for College Access and Success ( 2018) of survey data from American four-year universities and colleges, the average student debt level increased from $18,650 in 2004 to $29,650 in 2016. Although this may indicate more people attending college, the percentage of high school graduates attending college grew by just four percentage points (65.8% in 2006 to 69.7% in 2016), an increase of 38% in terms of absolute number of students (BLS 2017). At the same time, the Consumer Price Index increased only 21.1%. From 2006, consumer credit debt grew approximately 70% and mortgage debt grew by 24%, but student loan debt grew by 232% (Fig. While student loan debt remains smaller than consumer credit debt ($4.1 trillion) or mortgage debt ($15.5 trillion), the rate of growth of student debt is significant. (Billion of Dollars), b: Debt Trends U.S.
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