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Let's Stop Addressing the Fake Student Loan Crisis

By    |   Wednesday, 16 Jul 2014 07:54 AM

Student loans are being blamed for slow growth in the economy. Loan repayments are keeping recent graduates from buying cars and homes, and that is hurting growth under this theory.

The facts show student loans can't be that big of a problem.

Average cost of tuition and fees at a state college are less than $9,000, according to the College Board. Therefore, total costs for four years would be $36,000. If a student borrowed the full amount, they would face a loan payment of $414 a month, or almost $5,000 a year, for a 10-year loan.

According to the Department of Education, among 25 to 34 year olds, college graduates earn an average of $16,900 a year more than high school graduates do. Even graduates with higher-than-average student loan debt should be able to manage the debt while building their life.

Experts generally find that as long as the debt load is less than one year's worth of income, the student should be able to meet their repayment schedule.

The average starting salary of college grads was $45,473 in 2014, ranging from $38,365 for humanities majors to more than $62,000 for engineers. Again, even the lowest-paid grads, on average, should be able to pay their loans.

The student loan crisis isn't about paying for college. It's more about choices to use loans to pay for a degree in a low-paying field or using loan proceeds to fund a student's lifestyle while in college. The numbers show student loan debt is manageable for most, although there are some true horror stories that serve as the baseline for many reports on the subject. While those horror stories are unfortunate, we can't make policy based on the well-selected anecdote when the majority of students who finish college are able to meet their obligations.

Editor's Note: 10 Secret Ways to Make Big Money Like Warren Buffett

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MichaelCarr
Student loans are being blamed for slow growth in the economy. Loan repayments are keeping recent graduates from buying cars and homes, and that is hurting growth under this theory.
student, loan, pay, debt
312
2014-54-16
Wednesday, 16 Jul 2014 07:54 AM
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