Why We All Should Care about Student Loan Debt

September 21, 2018

Student loan debt is now the second highest consumer debt category - behind only mortgage debt - and higher than both credit cards and auto loans, according to Forbes. Make Lemonade, a personal finance comparison site, cites there are more than 44 million borrowers who collectively owe $1.5 trillion in student loan debt in the U.S. alone. The average student in the Class of 2016 has $37,172 in student loan debt.

Here are some of the staggering statistics:

Total Student Loan Debt: $1.52 trillion
Total U.S. Borrowers With Student Loan Debt: 44.2 million
Student Loan Delinquency Or Default Rate: 10.7% (90+ days delinquent)
Total Increase In Student Loan Debt In Most Recent Quarter: $29 billion
New Delinquent Balances (30+ days): $32.6 billion
States With The Most Student Loan Debt - California, Florida, Texas and New York are among the four highest states for total student loan debt outstanding among resident borrowers. Pennsylvania is #6 on the list.

Nearly seven in 10 seniors (68%) who graduated from public and non-profit colleges in 2015 had student loan debt.

Four out of five 2016 graduates with state loan debt attended schools in just four states: Texas, Minnesota, Massachusetts, and
New Jersey that awarded only 14% of bachelor’s degrees.

Of the 100 colleges where graduates borrow most in private loans, 85 are nonprofit four-year colleges and 34 are in Pennsylvania.

In The New Toll of American Student Debt in 3 Charts, Bernard and Russell cite a new game show “PAID OFF” as a sign of the times offering winners not dream vacations or new cars, but a pile of cash to help lessen the crushing weight of their student debt. But that is not the whole story. They say, “A new analysis of federal loan data indicates that the average student’s debt load is plateauing, and perhaps even declining slightly, at least when adjusted for inflation.” So, who is picking up the slack? Parents!

A college education is not becoming more affordable, and students are borrowing the maximum amount from state and federal loans. This leaves the remainder of the of the burden for parents to shoulder, and many parents are going into debt to finance their children’s education.

Should Businesses Help Employees Pay Off Their Student Loans? In an article for The Atlantic, Amy Merrick purports that there is no tax advantage like there is for retirement plans, healthcare and tuition assistance, and it’s not easy, but some employers are offering loan repayment as a benefit. She goes on to say that A U.S. House bill introduced in February 2017, H.R. 795, would give employers’ student-loan payments more favorable tax consideration, bringing them in line with tuition assistance. The bill has more than 100 co-sponsors from both parties, but the measure was not included in the giant tax- reform plan passed in December, and it is stalled in the House Ways and Means Committee.

Additionally, some of these companies are starting to offer this benefit to older employees who have taken out loans to cover their children’s college costs. (People over the age of 50 are the fastest-growing group of people who hold student debt in the United States.)

As a parent of two millennial children, this is compelling. Mike and I experienced this phenomenon while both our kids were in college and I was pursuing my doctorate. His nickname for me is “Dr. Debt!” We see how this is affecting our children’s generation, as well as our peers, who are taking on debt to support their children’s educational goals. What can we do?

PAISBOA has partnered with GradFin to help our independent schools and universities help their employees address student debt. GradFin has been working successfully with people who want to refinance their student loans—by helping them understand their own personal financial situation through education, and by helping them create a realistic payment plan. Sign on to our Wednesday Webinar at 10 a.m. on Wednesday, October 24 to hear more from GradFin, and become part of the solution to this ever-growing problem.

Take advantage of the power of the flock!

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