It’s graduation season, so the media is stoking the flames of political divide with what is commonly referred to as the “Student Loan Crisis” (example). I saw a couple of charts that illuminate the issue pretty clearly, so I thought I share them with my small readership here.

First, according to the Education Data Initiative, the average student loan payment for a Bachelor’s Degree is now $370 per month (2026 data). That’s $4.4K per year. They say that the average person stretches their debt out almost 20 years for some reason, meaning they pay almost $40K before the loans are completely finished.

At the same time, households with someone that has a college degree earn about $65K more than those without a college degree. Every year. Maybe the difference isn’t as great in the first year after graduation, but I’m sure the gap grows pretty quickly. After 10 years, it’s likely much higher.

So, if my “fun with math” is correct, on average these college graduates pocket about $1.3 million in extra earnings before retiring their $40K debt. That means they could have easily dispensed the entire student loan debt balance almost any year of those 20 years. Still, they drag it out. Student loans have a pretty easy terms, so why not?

Now, of course, some college graduates don’t do as well as the average. 50% of them, in fact. Still, if they made only half of what the average person did, they should still be able to cover their payments 7x over, or paid off the whole amount in just two years.

So, I suggest if you are attending a high school graduation party and the young person is heading off to college in the fall – wish them well. Even if they are taking student loans, they are likely making a very astute financial decision.

Do you know anyone heading off to college in the Fall?

Image: Pixabay; William & Mary Wren Building