College is expensive. There’s no doubt about that fact. Costs of a college education are rising each year, and the costs in no way reflect the income gains and inflation in the US. This chart from Center for American Progress shows the grim picture.
image via Center for American Progress
Since students and parents can’t afford these skyrocketing rates most students (or parents) have to take out student loans to cover college costs and expenses. Student loans are often considered ‘good’ debt. It’s debt that will help you further your education which can increase your income. While it is true that student loans can be used effectively often young graduates end up leaving school with mountains of debt and many years of debt repayment ahead of them.
There are some stark facts about the rise in student loans that will give you pause about how ‘good’ they are. Student loans now make up more of our nation’s debt than credit cards and auto loans combined. The amount of student loan debt as a whole now totals in the billions. Even in the last decade education debt has risen dramatically. Consider telling graphic from a Mother Jones article on student loan debt.
image via Mother Jones
What’s worse only slightly more than half of college students (54%) graduate with a degree in 6 or less years. A study that breaks down enrollment and graduation rates by state, status of student (part-time or full-time), and age offers more details on who is graduating and from where, but that number is enough to give anyone pause. (read the report here)
All this means that nearly 50% of young adults leave home to go to school, drop out, are saddled with debt, no degree, and enter a workforce that is competitive.
Where’s the good news?
More young adults are going to college. While in generations past many young adults would save up to buy a home in their 20s, many are now opting to stay out of the housing market. Instead of going into debt for a home, they are now going into debt for education. That’s a good thing if you graduate (and depending on your field). Graduates with bachelor’s degrees still earn more than their peers who have high school diplomas.
What about you?
While these numbers seem grim and overwhelming, there are some important insights that you should consider when you’re making your personal financial decisions as they relate to college costs.
We’re in the same boat as many of my readers. Our family is facing some tough college decisions in just 3 short years (our oldest is a sophomore in high school this year). It’s certain we won’t be paying for his college costs outright, but there are plenty of other things to consider when we’re talking about funding our children’s college education. I’ll share those, as well as our personal thoughts on kids and college costs soon, but I want to hear from you first.
Take this short survey or leave a comment about your own experiences going to college (or not) or your plans to pay for college for your kids (or not).