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
MrFireStation 
I think the whiners about student loans did not consider the post-graduation employment opportunities when picking a major. They spent five or six years getting a four-year degree and did not watch the budget.
The cost of college has been increasing much faster than inflation for the past five decades. My recommended fixes would be outlawing student loans entirely, plus barring Chinese students. This would put a lot of colleges out of business that deserve to be out of business, and force administrations to trim the fat to offer a product that is affordable. When I went to the University of Wisconsin during the late 1970s the norm was for students to work long hours during the summer to pay their own way through college and graduate debt free.
The US also needs more young people going into the skilled and inspected trades. They are missing the opportunity to earn as an apprentice while they learn and make a solid living when they get their Journeyman’s License. My oldest son went to college to study business. We worked at jobs he didn’t like and was earning around $60,000. He retrained to be an electrician and now is making around $140,000 per year and likes his work.
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I’d simply let colleges compete freely. Eliminate public subsidies & grants. Make loans private again. That would probably drive tuition up, which would result in a lot of the impacts you are looking for. But, it would be more fair to students & taxpayers both.
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I read on FB this morning that due to maintenance issues, Pasadena City College will not offer inter-collegiate aquatic programs this fall. I of course had to comment that such programs have no role in Community Colleges as they are very expensive and benefit few students. I really got flamed for that comment. People don’t realize the role that Community Colleges play. Sports doesn’t fit their mission.
Returning to the topic, limit the amount of loans students can borrow or have an outstanding balance and people will get serious about school.
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Completely agree. I’m a big sports fan and plainly see that we need “separation of sports & education”. The only mission that sports plays is fundraising – although most of those $$$ go to stadiums & facilities for more sports.
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