It should come as no shock that college graduates are having a hard time paying back their student loans, but it is not for a lack of trying. Indeed, it is getting harder and harder to pay back student loans and there are many reasons for this.
For example, Michele Raneri says, “Student loan balances are on the rise, which is a result of the increasing cost of higher education.” Raneri is the vice president of analytics for the credit reporting agency Experian, and goes on to say, “I expect that the price of getting a higher education will continue to increase, so I wouldn’t be surprised if the loans increase also.”
The data actually shows that college loan balances in the United States have increased by more than $833 billion to an all-time high, of course, of $1.4 trillion. Spreading that out across all of the college loan holders, the average balance is up 62 percent over the last decade, at $34,144 per person. In addition to this, though, the percentage of borrowers who owe more than $50,000 has tripled over the same decade, as described in reports from the United States Consumer Financial Protection Bureau (CFPB).
Obviously, college loans are a big part of personal expenses. In fact, getting a college education is now the second-largest expense that an individual can incur. The only thing that outpaces college loan debt is buying a home.
Now, it is important to also note that delinquencies are down 3 percent over the same ten year period. Raneri goes on to say that this means “consumers are managing their student loan payments better than they have in the past,” perhaps in part because they are better educated about credit as we recovered from the Great Recession.
Many college graduates have actually expressed something like buyer’s remorse over how much their education actually cost versus what they had expected. In fact, 57 percent say they regret taking out as many student loans as they did while 36 percent admit they might have reconsidered attending college at all had they really understood the financial hardships.
Experian director of public education Rod Griffin comments, “In most cases, higher education is worth the investment because student loans pay off in the form of higher income over time. However, it’s especially important for young people to understand the terms of their loans.”