About these ads

Congratulations to Class of 2014, Most Indebted Ever

gradsFor WSJPhil Izzo writes:

As college graduates in the Class of 2014 prepare to shift their tassels and accept their diplomas, they leave school with one discouraging distinction: They’re the most indebted class ever.

The average Class of 2014 graduate with student-loan debt has to pay back some $33,000, according to an analysis of government data by Mark Kantrowitz, publisher at Edvisors, a group of web sites about planning and paying for college. Even after adjusting for inflation that’s nearly double the amount borrowers had to pay back 20 years ago.

BN-CU894_class2_G_20140515160833

Meanwhile, a greater share of students is taking on debt to finance higher education. A little over 70% of this year’s bachelor’s degree recipients are leaving school with student loans, up from less than half of graduates in the Class of 1994.

The good news for the Class of 2014 is that they likely won’t hold the title of “Most Indebted Ever” very long. Just as they took it over from the Class of 2013, the Class of 2015 will probably take it from them.

But as the debt burden of college graduates continues to rise faster than inflation, it begins to complicate the question of whether a bachelor’s degree is worth the expense. So far, that answer is a firm “yes.” College graduates have a lower unemployment rate and make more money than their contemporaries without a degree. Of course, some majors pay more than others, but in just about every industry workers with college diplomas are paid more than their counterparts without one. And the more education a person has, the greater the pay advantage becomes. (Although, that also often means more loans. “About 15% of graduate and professional school students graduate with six‐figure student loan debt, compared with only 0.3% of undergraduate students,” Mr. Kantrowitz says.)

But will the debt associated with a college degree always be worth it? That’s a little less clear. “A good rule of thumb is that undergraduate and graduate students should borrow no more for their entire education than their expected salary at graduation,” Mr. Kantrowitz says. For the average borrower, that’s still a pretty good bet right now. Granted, not everyone has the same debt, and not everyone gets a job at graduation. But if we compare student debt for young college graduates and salaries for young people with degrees, we can get a sense of where we stand…(read more)

The Numbers Guy – WSJ

About these ads

One Comment on “Congratulations to Class of 2014, Most Indebted Ever”


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Follow

Get every new post delivered to your Inbox.

Join 5,072 other followers