Student loan debt has risen to about $1.3 trillion. And a month from now, nearly all of us writing this blog will have graduated college.
Suddenly, student debt has never seemed so real.
According to a 2013 article published in Forbes —back when the number had just hit $1 trillion—two-thirds of American students were graduating with debt, and they weren’t leaving college owing pocket change. The average debt was closer to $26,200, with one in every ten leaving with a debt of more than $40,000.
That was three years ago, and since then the problem hasn’t gotten better. Since our country’s recession, in fact, student debt increased over 84 percent. And while I may be caught in the crossfire, things don’t seem to look much better for students just entering college.
It makes you wonder: If there is no end in sight, as the trends and numbers indicate, how long can this go on before it blows up in our faces?
In this article, for example, economist Eric Parsons notes that a continuing increase in student debt could eventually lead to another economic crisis similar to the housing market crash. As with the housing bubble, students are overwhelmed with debt they can’t pay back. Does that sound familiar?
So how are we supposed to better prevent this from happening?
While this may require a far longer and more complicated solution than we may hope, researchers seem to rely on informing students what they’re getting into. Increasing awareness is the first step, followed by initiatives on colleges’ part to better explain the financial aid packages they’re awarding students.
Fixing this will require a huge change in the system to prevent an economic crash similar to the housing recession. And this step needs to happen soon.
If not, the potential effects of yet another recession are just about as scary as $1.3 trillion.