Most college graduates have one major thing in common: student debt. Today, 70 percent of college students graduate with a significant amount of loans.
Over 44 million Americans collectively hold nearly $1.5 trillion in student debt. That means that roughly one in four American adults are paying off student loans.
When they graduate, the average student loan borrower has $37,172 in student loans, a $20,000 increase from 13 years ago. With that money, borrowers could put a down payment on a home, purchase a new car or bootstrap their own business.
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As the size of student debt owed has increased, so have monthly payments. The Federal Reserve estimated that the average monthly student loan payment increased from $227 in 2005 to $393 in 2016.
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These significant financial burdens are impacting the ways Americans save, spend and live their lives. The Federal Reserve Board of Washington, D.C. found that an increase in student debt has led to a decrease in home ownership. A study from NerdWallet predicts that students who graduated from college in 2015 will have to delay retirement until the age of 75, in part because of the increasing burden of student debt.
One key cause for the increase in student debt is that more Americans are going to college than ever before — and they need to.
Experts predict that the future job market will require a significant increase in skilled workers. According to the Georgetown Center on Education and the Workforce, by 2020, 65 percent of all jobs in the American economy will require education beyond high school. However, the U.S. Census estimates that just 33 percent of American adults currently possess a bachelor's degree or more.
As students aim to meet these demands of the labor market, they are hitting the books and taking out loans.
Most recent figures from the National Center for Education Statistics (NCES) show that students earned approximately 1.9 million bachelor's degrees during the 2014 to 2015 school year — a 32 percent increase from 2005.
A 2014 study by the Brookings Institute states that "roughly one-quarter of the increase in student debt since 1989 can be directly attributed to Americans obtaining more education."
Despite the challenges of student debt, David C. Bloomfield, professor of education leadership, law and policy at Brooklyn College and The City University of New York Graduate Center, says that earning a college degree is still one of the wisest investments a student can make. "Completed degree programs from reputable institutions are still the most reliable investment in future income and well-being," he says.
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