The Consumer Financial Protection Bureau yesterday revealed that outstanding student debt crossed the $1 trillion mark last year, 16 percent higher than an earlier estimate by the Federal Reserve Bank of New York. At $1 trillion, this category of debt is much higher than the sum total of credit card debt in the United States.
Student debt has been called a defining characteristic of this generation and tuition fees in American colleges, private or public, are on the rise. Since 1982, the cost of a college education has risen 439 percent.
However, with the bleak economic environment and weak job market, graduates are finding it increasingly hard to find a job to pay off those loans.
Rohit Chopra, the federal bureau’s ombudsman, said the initial findings on the student loan market were‘sobering’, calling the debt a big ‘risk for a generation of young people, many of whom are struggling in today’s economy.’
Despite the weak job market, economists still say higher education is a good investment, given the widening income gap between a degree and non-degree holder. According to ‘economic calculation’, the higher income will, in time they say, offset the investment cost, that is student loan debt.
However, CFPB officials also noted a surge in Americans going to college in recent years – a trend of students going to college to avoid the weak job market.
Recent studies have found that 81 percent of the class of 2009 had no job upon graduation.
Even students who found jobs are earning less: 45 percent of college graduates earn less than $15,000 per annum 2 years after graduation.