Stop Calling Student Loan Debt A “Crisis”

I really hate writing articles about political issues, but here I am again. The Biden administration’s student debt cancellation policy – which seeks to erase $430 billion in college student loan debt – is in the headlines again. We’re awaiting a Supreme Court’s decision on its Constitutionality, likely this June.

It caused me to look a little into the scope of the “CRISIS” as it is frequently described in the media.

First, I learned that the average federal student loan debt payment today is $289/month ( Surprised? I always hear it described as a “financial crisis”, so I wasn’t quite ready for a number that low. That’s only about $3.5K a year in payments. My wife and I paid more than that 35 years ago. This chart shows it’s not even trending up …

Importantly, the chart shows average student loan repayments for ALL students. It is actually much lower for those with Associate’s Degree ($196/month) or Bachelor’s Degrees ($267/month) than it is for Graduate Degree holders ($567/month). Graduate-degree holders on average make a LOT more income than those having undergraduate degrees, so it’s no surprise that they take out more debt to pay for them.

Still, even undergraduate degree holders also make a lot more money in income on average than people without college degrees, don’t they? Are payments of $3.5K/year too great an expense for them to pay on their post-graduate salaries? Are they in a CRISIS? No, not in the least.

U.S. Census data shows that someone with a Bachelor’s degree earns a whopping $40K more per year than someone with a high-school diploma ( That’s an incredible 11x more than they need to pay their student loan debt.

Still, polls show that two-thirds of Americans believe that student loan debt “is a serious problem” and slightly more than half support Biden’s student loan cancellation plans (Brookings Institute). I guess once people have heard the lie that there is a “crisis” enough times, they tend to believe it. Supporters of debt cancellation – which likely includes most college & university administrators – are happy to repeat the “crisis” claim over and over.

Here’s hoping that the Supreme Court sees fit to ending the ridiculous executive order and some sanity is restored to our government’s endless spending. Perhaps that will allow the public some time to see what a ridiculous term “crisis” is to apply to these loan payments.

Sorry for the Monday political rant. I couldn’t help myself. Please let me know if I’m missing something significant in the characterization of this situation.

Image Credit: Pixabay

17 thoughts on “Stop Calling Student Loan Debt A “Crisis”

  1. I wonder how they came up with those average salaries in the table you posted. What a joke. I have a Bachelor’s degree, what did I earn at our mega corp. When I started working in public education my job required an Associate Degree in Child Development or a Bachelor’s degree in education or a related field and one year of experience working with children. My starting pay was $11.00 an hour. Unions supporting education workers have been busy, salaries have doubled in the past 8 years, however, health care costs have eaten up apx. half of those raises. So there you go. Find a better table, the one you posted is biased and doesn’t represent the average American.


      1. My Principal made apx. $150,000/year — PhD in education, 20+ years of experience. Staff thought she was high paid, I just laughed. I guess if you trust our government, you can agree with their tables. I had co-workers on food stamps, one young woman sold her blood to the blood bank for grocery dollars. We had a new hire, she made enough money to pay her rent, was happy to get a part-time job at Target as she could then buy groceries. Eliminating student debt is good for developers as folks can pay the rent, they can’t do both right now. Salaries are not meeting the cost of living right now. I would prefer it if the government just took over the banking system, but they won’t so eliminating student debt is reasonable. My niece has begun a career in nursing. Did you know they have eliminated an entire shift. They used to have days/evenings/nights. She works 12 hour shifts, they only have 2 shifts today. Her landlord is her Dad, so the rent is cheap and her Mom lives with her and does the childcare, cooking, cleaning, etc., etc. Multi-generational homes are the solution right now. Get ready, one day you will have babies in your home again :).

        Liked by 1 person

      2. $150K seems about right for a PHD. $140K is the average, but it probably varies by industry. I’m not sure why your school colleagues are so poorly paid. Nurses do pretty well on average – LPNs average about $50K & RNs about $75K. My son is a software developer and does very well – little chance he’ll need to move home. More likely we’ll move in with him!!

        Liked by 1 person

  2. It is those who have run up student loan debts well above the average and work in fields that pay well below the average who are yelling for student loan forgiveness. Quite often you see articles where the author makes the case for why there should be student loan forgiveness. This sort of story will feature someone who is hopelessly in debt, with a story that goes on to explain what a high number they are paying out monthly and why they don’t have a hope of ever repaying the loans.

    Here is what this sort of article does not tell you. The person spent more than four years getting a Bachelors Degree at an expensive college in a dubious major that doesn’t pay very well. The person does not service their debts responsibly, so they racked up interest and penalties for decades in some cases. They work at jobs that don’t pay well, by choice. For a cherry on top, many of the dubious majors (Studies Departments) have been infiltrated by Marxists whose solution to everything is taking more money from the productive.

    These stories are increasing because personal finance was taken out of high schools. Guidance counselors often use the wrong metric of how many students they got into elite and expensive institutions, instead of how many they guided into becoming financial successful adults.

    Let’s revisit the book, “The Millionaire Next Door”. This book described most of the Millionaires the authors interviewed went to affordable state colleges. Many went to community college for the first two years. They paid as much as they could when they worked their way through college. Many of the Millionaires didn’t go to college and learned a trade instead, where they actually earned money instead of paying money to learn their trade.

    The Millionaires paid attention to their education cost and went into fields where they would have a good return on their time and money spent. Once again, student loan forgiveness is government having the productive pay for other’s bad financial decisions.

    Liked by 1 person

    1. Agree – I know some folks like this. It’s just anecdotal, of course, a book club I used to belong to was comprised of quite a few sociology majors that worked in education or state government and weren’t (in their mind) fairly compensated for their important (in their mind) & expensive degrees.

      Liked by 1 person

  3. I would be interested to see how much parent-owned student loan debts are included in the figures above. Keep in mind that there’s a limit of around $27K of federal student loan debt that a student can get without a co-signed, at least for the “typical” college student that does not have sufficient income to qualify for a normal loan.

    In order to get around these limits, many parents end up co-signing loans on behalf of their kids. In some cases parents will take out a federal “Parent PLUS” loan that can be up to the total cost of the school, and then make a “side agreement” with their kid to pay that back once they have a job. I think that when you hear about people with crazy high amounts of undergraduate student loans, this is the typical scenario.

    I can tell you that I personally know many kids that have piled on student loan debt this way, so it’s definitely not uncommon. I’ve actually hired a lot of engineers with stories like this, who are carrying six figures of student loans – either directly, or indirectly via their parents (or some sort of combination).

    All that said, I think there are multiple factors at play here. Obviously there are lots of kids in the kinds of scenarios described in other posts, where they either borrowed money for useless degrees that don’t provide meaningful payback, and/or they have intentionally skipped over more cost-effective college choices in order to get a “brand name” degree that they incorrectly think will impress other people later on. There is also obviously a cost issue as well – all this money has allowed colleges to continue to increase tuition as they know people will pay “whatever the cost,” which leads to inefficient college spending choices on administrators, etc.

    I’m personally against this “student loan forgiveness” nonsense as it does absolutely nothing to correct the issues I identified above. In fact, if anything it will make it worse – if people come to expect “forgiveness” they will be willing to spend more money to go, which will just further bid up the cost of higher education. What a messed up system!

    Liked by 2 people

    1. Yes – college tuition has soared as government has made it easier to get these loans. There’s nothing worse for prices than subsidizing something that is already capacity constrained and colleges & universities do there best to keep capacity constrained.

      Liked by 1 person

      1. My middle son was helping my youngest son studying for an upcoming physics midterm. I overheard middle son tell my youngest son, “you need to look this up in Khan Academy, their teachers are much better than most college professors.” The cost is free!

        The education field is ripe for technology to make the best teachers available at lower cost. Employers can help make this happen by leveraging assessments to gauge whether a candidate has the skills and aptitude required to do the job.

        I only had three employers over the years give me an assessment test to prove what I know. To me, I found comfort in this because I knew they extending an offer for real reasons instead of just saying the right thing and did I use the right fork to eat my salad at lunch.

        Liked by 1 person

      2. I’ve always heard great things about Khan Academy. It would be great if it could disrupt higher education. Agree that the “coordination problem” between schools & employers could be resolved with aptitude tests. They are common in some fields, like insurance & accounting.

        Liked by 1 person

  4. Chief, calling this a “crisis” is akin to yelling “fire” in an auditorium where there is no fire. The political purpose is to stir up partisans, engender outrage, distract from other issues of greater danger, and “buy votes” from a privileged class of citizens. Forcing the rest of us to pay for financial shortsightedness on the part of government, lenders, and debtors is federalism at its worst. Will we “forgive” our leaders? Usually, we just keep voting for the same hacks and they keep repeating their same egregious failures.

    Liked by 2 people

    1. That’s certainly what we do in Minnesota – “forgive” them. Despite 3 years of lockdowns, fraud, and riots, every blue MN incumbent re-elected in the latest election. If Biden can’t get student loan cancellation through, I’m sure we’ll have a state-level proposal ready next.

      Liked by 1 person

  5. Wouldn’t it be cool if the feds came clean: “Oops, we made a huge mistake. Student debts for discretionary higher education have seriously burdened many of the debtors. Those were not our intention, but they are the outcomes. Our bad. We don’t know how to stop giving money away, creating huge debts for individuals and our natIon. Again, our bad. But look at it this way: What other choice do you have but our leadership? So stop bellyaching if there’s nothing you can do about it. We “forgive” you anyway.”

    Liked by 2 people

  6. When I was young the popular bumper sticker was “don’t trust anyone over 30”. That was a reference to old dudes who got us involved in Vietnam. Now that I am old I have the phrase in my head “no one under 30 has any idea of how things truly work and who pays for all of it”

    The “reward” of completing your 1040…..You get to see what your quarterly payments will be! Don’t use it to pay off loans that idiots volunteered to pay.

    Liked by 1 person

    1. Everyone under 30 unfortunately does understand how things truly work. The 80-year old President pays for all of it in their eyes! 😉


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