It’s All Fun And Games Until You Graduate

Let’s talk debt. Debt caused by the copious amount of money borrowed by students to put them through college. I am one of those students who will be graduating neck deep in student loans and borrowed money. Chris Denhart, a staff writer for Forbes reported that two thirds of American graduating students graduate with at least some level of debt. Now lets take a look how this debt effects our economy.money

Borrowing money as a student has many implications. One problem is that students do not take into consideration the long-term effects that loaning money could potentially have. Most student loans allow a six-month time period between the time of graduation and when loaners are expected to pay back the loan. Despite receiving a degree, over 25 percent of college graduates between the ages 21 and 24 are either unemployed or underemployed. During the six-month “grace” period that student loans allow before they expect the loaner to pay the loan back, college graduates struggle with the fact that they are functioning independently in society as adults, and find it hard to afford paying back the money that they borrowed. However, with tuition and living expenses on the rise, it has proven to be difficult to make it through college without borrowing any money at all.

underemployed2

(Underemployed)

One of my teachers in high school mentioned that she paid her way through college working as a waitress. She would work, save her money, and then make her monthly payments. Upon graduation, she had paid for her living expenses, education, and had escaped the suffocating and crippling effects of taking out a student loan. Sure, this was probably over forty years ago, when the tuition for a full year of college was somewhere around $2000 dollars, but it is still pretty amazing that she was able to do that. Today, that seems like a dream.

Student-Studying-1

We live in a society where education is highly valued. Nowadays, it’s hard to find a job with less than a college degree. The job market, being as competitive as it is, leads people to continue furthering their education after college, to attain their master’s or even doctorate degree, thus in many cases, borrowing more money to pay for it.

Taking out a student loan is a negative game for both the student borrows as well as the economy. The Consumer Financial Protection Bureau reported that the student loan debt has reached over $1.2 trillion dollars, $1 trillion being federal student loan debt. Student loan debts make up six percent of the overall national debt that sits, not surprisingly, at the $16.7 trillion dollar mark. Six percent of that debt is no small figure. National debt attributes to the decrease in jobs created because debt itself carries many consequences including rising interest rates and slowing economic growth.

With student loan debt slowing economic growth and lowering the amount of jobs created, how are the two-thirds of American graduates supposed to pay off the money they barrowed without a job to cover those expenses?

http://www.forbes.com/sites/specialfeatures/2013/08/07/how-the-college-debt-is-crippling-students-parents-and-the-economy/

http://www.consumerfinance.gov/newsroom/student-debt-swells-federal-loans-now-top-a-trillion/

http://college.usatoday.com/2014/11/13/koru-immersive-program-with-85-job-placement/

http://www.debt.org/students/how-to-pay-back-loans/

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4 thoughts on “It’s All Fun And Games Until You Graduate

  1. jamesel2014 says:

    It is outrageous with the amount of debt college graduates, but I think eventually it is all worth the borrowing because degrees do in fact land you great careers. The thing that bugs is that universities and colleges expect you to make monthly donations after you suffered so many years of stress and agony during the 4 years.

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  2. johnsona2014 says:

    Since college tuition is constantly rising along with loan sizes, it is important for college students to understand the amount of school that is the most efficient for them economically. This could mean that pulling out with a 2 year degree could lead to less economic distress in the long run. While a master’s degree looks appealing, it can severely dent your pocketbook if not put to good use.

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  3. jaffeas says:

    While it is extremely unfortunate that people leave college with an unhealthy amount of student debt, I think that in this day in age people are aware of the costs that they will incur by going to school. In my opinion, going to university or college shouldn’t be so outrageously expensive, but it’s hard to complain about debt when the price of school is advertised and people go into it knowing what will happen.
    I have a bigger problem with the possibility of college taking away financial aid or scholarships away from people once they are attending a school, because it puts the student in an impossible place.

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  4. You are right! This is a vicious cycle. Nowadays, we need higher education in order to get higher-paying jobs that will allow us to sustain comfortable lives, of varying degrees, but in order to get a higher education we take out a lot of loans. Which can add to national and personal debt. Which can lower the amount of available jobs. So we need to be more competitive and get more credentials and education than the next person, which likely entails taking out more loans.

    Isn’t this crazy?

    Related to what @johnsona2014 said, I wish there was a sure way for us to determine before going to school what would be most economically efficient for each individual.

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