The student loan debt crisis keeps getting worse. Tamar Lewin reports for the New York Times (link here) that “(s)tudent loan debt outpaced credit card debt for the first time last year and is likely to top a trillion dollars this year as more students go to college and a growing share borrow money to do so.”
Unfortunately, the trend is set to continue:
The mountain of debt is likely to grow more quickly with the coming round of budget-slashing. Pell grants for low-income students are expected to be cut and tuition at public universities will probably increase as states with pinched budgets cut back on the money they give to colleges.
So what’s new?
I realize this isn’t earth-shattering news to today’s young people or their parents. But it’s important to keep the issue alive. We’re talking about a generation that is being asked to shoulder an enormous share of financial burdens as the price for getting a start in life.
The policy and practice of supplanting scholarship monies with student loans as the primary sources of financial aid emerged in the early 1980s (not coincidentally, right after the election of Ronald Reagan as President) and remains the norm, even as college tuition continues to increase.
In the mid-1970s, 10 years was the standard repayment period for student loans. Now, repayment periods often stretch out over 30 years. A college graduate in her 20s can anticipate making student loan payments into her 50s. Lewin quotes Lauren Asher of the Institute for Student Access and Success:
“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.”