The Class of 2014 has already made history, and it’s not for good reasons. New data reveals that recent college graduates have become the most indebted class in American history.
The average 2014 graduate with student-loan debt has to pay back about $33,000, according to an analysis of government data reported by The Wall Street Journal. Even after adjusting for inflation that’s nearly double the amount borrowers had to pay back 20 years ago. In 2013, the average debt per student was around $31,000 and under $10,000 in 1993.
The average student loan debt has increased every year for at least the past two decades, and more young adults are accumulating debt. Since 1993, the percentage of students taking out loans for college has risen from around 46 percent to 70 percent.
The student loan reality is a part of a conundrum in which students are encouraged to attend college in order to land a job and/or make more money, yet many are drowning in debt they can’t afford. Still, research continues to show that education is still a wise and worthwhile investment. College grads are generally more employable and they earn significantly more than those without degrees.
However, while the percentage of students taking out loans increases, their potential salaries have decreased. Between 2005 and 2012, for example, the average student loan debt jumped 35 percent, adjusting for inflation, while the median salary dropped 2.2 percent.
To avoid accruing too much debt, experts suggest that students not take out more than the expected salary of their first year of employment. But as PolicyMic points out:
For the time being, matters seem manageable — according to 2012 data, the median salary for a someone holding a B.A. was $46,900, while the "average student loan balance" for people under 30 stood at $21,000. But things are definitely getting worse, and recent and future graduates will increasingly have to shoulder the burden.
Student loan debt - which has hit over $1.1 trillion - is also messing the U.S. economy,
particularly the housing market, as those with student debt have less money for a down payment.
Though the Class of 2014 has taken the crown as the most indebted, they’re not expected to have that title for long, as the Class of 2015 is well on pace to snag it next graduation season.
(Photo: Alex Slobodkin / Getty Images)