Student loans are a hot topic among both college-bound students and graduates with loan debt, as the total outstanding debt among Americans surpasses $1 trillion, according to recent estimates. Given just about anyone can obtain a student loan, and there are virtually no qualifying criteria for borrowers attending post-secondary institutions, many borrowers enter these loans without adequate future planning. Additionally, with student loans being federally guaranteed, a bankruptcy cannot eliminate these loans and a borrower essentially only has one option to get rid of the loan — repay.
With all of the attention and sometimes negative light this topic receives, it may lead students to wonder whether or not the benefit of borrowing to earn a college degree outweighs the costs associated with student loans. These costs not only include the loan’s principal and interest but also the costs associated with beginning one’s life and career in debt. Pew Research published a recent report entitled Young Adults, Student Debt and Economic Well-Being. The report analyzes characteristics of student debtors. This summary of the report’s key findings may help prospective borrowers answer the big question: is it worth it?
Around 4 out of 10 households where the head of household is under the age of 40 have some student loan debt. The median debt amount among these borrowers is $13,000. This may sound low considering the average yearly cost for tuition alone at an in-state school is around $9,000. However, many of these borrowers have already repaid a portion of their loans, and some of these borrowers attended college during time periods when tuition costs were lower.