One In Five U.S. Households Affected By Student Debt: Study
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A record number of American households are now burdened by student loan debts, claimed a new study by the Pew Research Center, with outstanding student loans now topping $1 trillion, while rising tuition costs continue to weigh down students’ education.
A record number of American households are now burdened by student loan debts, claimed a new study by the Pew Research Center, with outstanding student loans now topping $1 trillion, while rising tuition costs continue to weigh down students’ education.
According to Pew senior economist Richard Fry, nearly one in five (19 percent) American households still owed student debt in 2010 – more than double the percentage of households two decades ago and a significant rise from the 15 percent that owed such debt in 2007, just prior to the global financial crisis.
The Pew Research analysis also found that a record 40 percent of all households led by someone younger than the age of 35 were still paying off student loans owe such debt; while the average balance of student debt rose by 14 percent to $26,682 between 2007 and 2010 after adjusting for inflation.
Related: When Will The $1 Trillion Student Debt Bubble Burst?
Related: The Student Loan Debt Time Bomb
[quote]”Comparing the debt to their economic resources, the lowest-income fifth of households are the ones experiencing the greatest stresses,” said Fry, in an interview with the Associated Press.[/quote]“Until college enrolment peaks, I would not expect the amount of outstanding student debt to level off,” Fry added, noting that college enrolment has continued to climb since 2010.
The study released Wednesday is based on the Survey of Consumer Finances, conducted every three years and sponsored by the Federal Reserve. Fry noted that lower income households were struggling the most with student loans, with outstanding student debt accounting for 24 percent of annual household income among the poorest fifth in the country – compared to just 2 percent for wealthier families and 6 percent in the national average.
Wealthy households though accounted for 31 percent of the total national student debt, as poorer households are less likely to be able to afford to go to college in the first place.
“It’s been a hard labour market for everyone, but particularly for 18- to 20-year-olds, who have not been able to find work or find work in their qualified field,” Fry told NBC News.
“We know the total amount of student debt has been rising, but what this study does is help us get a handle on who owes it,” he noted.
The senior economist at PEW also said that he hopes the report will provide perspective for families as they consider educational options.
[quote]”Given the fact that the job market has been especially weak for young adults, I think there’s a conversation going on in a lot of American families with high school students about, ‘Is college worth it?’” Fry told USA Today. “Student loan debt is sort of the lightning rod issue for this conversation.”[/quote]Related: Infographic: College Is Expensive, But Is It Overrated?
Related: Infographic: How A Student’s Debt Affects the Family Unit
Related: Infographic: Is Higher Education the Next Big Bubble?
Click here to read the full report by the PEW Research Center.
