How Much Student Debt is Too Much?
Introduction
College students want to know how much student debt is too much. That’s because we’ve all heard the horror stories of people graduating with six-figure debts, or even more. The good news is that most people won’t reach that level of debt. The average college student graduates with $30,000 in debt, according to the Institute for College Access and Success (TICAS). But what about people who graduate from Ivy League colleges? Or law school? Or medical school? We’ll cover those questions and more in this post—after all, we’re not just here to talk about averages; we’re here to make sure you can pay off your student loans without eating ramen for the rest of your life.
In today’s day and age, it has become increasingly clear that getting a good job means having a degree.
In today’s day and age, it has become increasingly clear that getting a good job means having a degree.
In fact, many employers won’t even consider you for the position if you don’t have one.
And while some jobs can be filled by those who do not possess degrees—such as manual labor positions—many others require more advanced skills and education. But earning a college degree isn’t easy or cheap. In fact, student loan debt has more than tripled since 2004 to $1.5 trillion in 2016 alone!
Student debt is at an all-time high and only increasing.
Student debt is at an all-time high, and it’s only increasing. In fact, the cost of tuition has outpaced the rate of inflation by nearly 150% since 1978. In other words, if you were born in 1978 and went to college (or even grad school) between then and now, your student loan payments would be twice as expensive as they were when you started them. Student loan debt has increased over 300% since 2006 — compared to a mere 40% increase in wages over that same period — which means that many adults are currently paying more for their education than they would have been able to earn during those years by working full time!
The average college student graduates with over $30,000 in debt.
The average college student graduates with over $30,000 in debt. While this may seem like a daunting number, it is important to keep in mind that the cost of college tuition and fees has risen by over 2x the rate of inflation over the last decade. Furthermore, wages have not kept up with this increase; income growth has actually been negative for most people since 2007. The result is that students are taking on more debt than ever before just to get an education. This trend is unlikely to slow down anytime soon unless something changes quickly!
Student debt also varies by institution and field of study.
The amount of student debt you’ll have also depends on the institution and field of study you choose.
According to a 2018 report by the Institute for College Access and Success (TICAS), students who attend private colleges tend to incur higher levels of debt than those who attend public institutions ($32,550 compared with $28,100). Students who study medicine, law, or business are more likely than most to have high levels of debt—the average is $71,500 for education majors and nearly $130,000 for business majors.
For those who apply for and get scholarships, the amount of debt they graduate with is much lower than those who don’t apply.
For those who apply for and get scholarships, the amount of debt they graduate with is much lower than those who don’t apply.
Scholarships are usually awarded either by the university or by a third-party organization. They’re based on merit – how high your GPA is, how distinguished your extracurricular activities were, what type of major you chose – or need – whether you come from an underprivileged background. Some awards may be based on both merit and need; others may be given to recipients based on their gender or ethnicity if that criteria is specified in the award description.
For many, the amount of debt that they graduate with is less important than their ability to find employment post-graduation.
It’s important to consider the type of employment you want after graduation. For many, it’s simply a matter of finding any job that pays well. But for others, it may be more important to find employment in their field of study or with a company where they can grow. Some fields are growing and offer high salaries—for example, data science is projected to be one of the fastest-growing fields through 2024—whereas others aren’t so fortunate (the federal government estimates that most U.S.-based jobs will require at least some postsecondary education by 2020).
Those who find jobs that are not in their fields of study are likely to have more difficulty paying off student loans.
Students who graduate with degrees in fields of study that are not in demand will have a more difficult time finding jobs, and those who do find work will earn less money.
The flip side is also true: Students who graduate with degrees in fields of study that are in high demand can expect to earn higher salaries.
The chart below shows just how much students can expect to make depending on what they study, based on data from PayScale’s College Salary Report:
As student debt increases, so does the number of defaulted loans.
The average college student graduates with $30,000 in debt. If you’re still in school, don’t panic—that number will only rise as you get closer to graduation. The average amount that students owe upon graduating has increased every year since 2005:
- In 2005, the average was $19,000
- In 2006 it was $23,400
- In 2007 it was $25,200
Graduating with a lot of student debt can make finding a job difficult but is not impossible given the right circumstances
While it may be difficult to find a job that pays well if you have a lot of debt, it is possible. The first thing to do is make sure that the degree you received from college was in an area with high demand for jobs. If you are not able to find a job in your field, then look into other fields that pay well and have opportunities for advancement. It’s also important to look at what kinds of positions are available where you live or plan on living after graduation because this will determine how much money you can make right away and what kind of lifestyle you’ll be able to afford once out on your own.
Conclusion
By weighing the pros and cons of any potential student debt, you can make a more informed decision about whether or not it’s worth it for you.