Kent Bonacki’s five shocking facts about the student debt crisis
The average American student graduates from college with $29,000 worth of debt. Thus, there is no denying that younger American generations are facing a debt crisis as they enter the work force. What has been hailed the student debt crisis is only getting worse, as tuition costs rise, along with the cost of rent, food, and school supplies. Kent Bonacki has witnessed the impact of the student debt crisis on the lives of young people in America. Although grants and scholarships can help mitigate the effects of the crisis, they alone are not the solution. Below, Kent Bonacki outlines five shocking facts about the student debt crisis to help others understand just how dire the situation is for current and prospective students.
Roughly one third of adults under the age of 30 have student loan debt.
According to Kent Bonacki, the portion of the 18-29 year old population with outstanding student loans is roughly 34%. If you narrow the demographic further to only include young adults with a bachelor’s degree or more, you will find that this number rises to 49%. Further, the statistics show that debt is higher and more common among younger age groups. Only one in five adults between the ages of 30 and 44 have student loan debt, with this percentage dropping to 4% among those 45 years of age and older. Both of these figures are significantly lower than the for younger generations. Kent Bonacki claims that although these stats partially reflect the fact that older people have had more time to pay off their debts, they are also a result of the fact that young people are more likely now than ever before in history to take out a student loan. According to the National Center for Education Statistics, six out of ten students aged 18 to 24 took out a student loan to help pay for college, compared with half that amount in 2000.
The type of degree affects the amount of debt.
This may sound obvious, but according to Kent Bonacki, many students fail to realize how much the type of degree they choose will impact the amount of debt they acquire. A Pew Research Center survey found that the median amount of debt racked up by students who took out a loan was $17,000. This figure does not consider the discrepancies between degrees. When that variable is considered, the figures vary drastically. As you can imagine, those who completed less than a bachelor’s degree, such as a two-year college program, graduated with less than $10,000 worth of debt. Those who earned a bachelor’s degree came away with an average of $25,000 worth of debt. Finally, students who went on to do a postgraduate degree racked up the highest amount of debt at a median of $45,000. Only 4% had student loan debt in the six figures, and of this 4% the majority had gone on to do lengthy postgraduate degrees. These statistics clearly indicate just how much the type of degree a student chooses can impact the amount of debt they graduate with. Again, although this may have seemed obvious to you, you likely weren’t away just how much the amount of debt increases between a two-year college diploma and a four-year bachelor’s degree, shares Kent Bonacki.
College graduates with student loans have higher chances of earning more than people without a bachelor’s degree.
The statistics about the student debt crisis aren’t all negative. In fact, Kent Bonacki claims that students who earn a bachelor’s degree, even if they graduate with student loan debt because of it, are more likely to earn higher wages than those without a bachelor’s degree. Although student debt is far higher than it should be in the United States, one silver lining is that regardless of this debt, having earned a university degree still leads to a more prosperous future in the workforce. One study specifically looked at family incomes (combined income of the graduate and their partner) of people with student loan debt. The study ultimately found that college graduates had higher family incomes than those who did not have a bachelor’s degree, regardless of their loan status. A little over half of American college graduates in the 25 to 39 age range who have student loans live in families with combined earnings of $75,000 or over. This number drops to 18% for families without a bachelor’s degree. Another study shows that 53% of young adults without a bachelor’s degree live in families earning less than $40,000 each year. This is much higher than the 21% of college graduates with student loans currently living in this family income bracket.
Over 3 million seniors in the United States are still paying off student loan debts.
Although there are more young people than elderly people with student loan debt, it doesn’t mean that America’s senior population hasn’t been affected by the debt crisis. Kent Bonacki states that over 3 million Americans aged 60 and over owe over $86 million combined in student loans. Some elderly people have turned to their social security benefits as a way of paying them off. If you ask Kent Bonacki, the fact that there are people of this age who are still paying off student loan debt indicates a very serious problem.
It is possible that nearly 40% of borrowers could default on their student loan payments by 2023.
The default rate among college graduates still paying off student loans 20 years after graduating is on the rise, shares Kent Bonacki. A report by the Brookings Institute found that former students who are still battling debt more than two decades after finishing university are more likely to default. The report analyzed the rate of default for those who started college in 1995 and 2003 and based on these figures, predicted that up to 40% of borrowers could default on their student loan payments by 2023.
With these facts in mind, Kent Bonacki concludes that America is facing a major student debt crisis that could come to a head in the near future.