It’s much higher than most people think, setting aside any potential gains for increased wages. According to the public policy organization:
- Our model finds that an average student debt for a dual-headed household with bachelors’ degrees from 4-year public universities ($53,000) leads to a lifetime wealth loss of nearly $208,000
- Nearly two-thirds of this loss ($134,000) comes from the lower retirement savings of the indebted household, while more than one-third ($70,000) comes from lower home equity
- We can generalize this result to predict that the $1 trillion in outstanding student loan debt will lead to total lifetime wealth loss of $4 trillion for indebted households
Demos points out some startling facts about student loan increases over the last decades, which have come along with skyrocketing tuition rates.
Student debt has skyrocketed over the past decade, quadrupling from just $240 billion in 2003 to more than $1 trillion today. If current borrowing patterns continue, student debt levels will reach $2 trillion in 2025. Average debt levels have risen rapidly as well: two-thirds (66 percent) of college seniors now graduate with an average of $26,600 in student loans, up from 41 percent in 1989.
While Demos argues that rising student loan debt is due in part to state funding cuts, one might argue that escalating tuition rates are prodded by federal and state grants and loans, in turn leading to additional student loan debt.
In conjunction with the decline of college standards, skilled training, and math and science skills, millions of students are entering the job market without the appropriate education for America’s market-oriented workforce. The college education system is essentially training and staffing a parallel workforce detached from market pressures, which is in turn being subsidized by federal and state funding.
When students depart the quarantined environment of academia, they are faced with real demand, rigorous standards, and actual work. It’s only logical that these students would comprise an “intellectual proletariat” who have tons of animosity for the U.S.’ market economic system.
When half of new college graduates cannot find appropriate jobs, there is something broken in the education system; and not necessarily the economic system at large. While it is true that the unemployment rate is lower for those with college diplomas, and college graduates are more likely to make considerably more money over one’s lifetime, that is predicated on them being able to find meaningful employment.
As these graduates continue to suffer from mounting debt, diminishing job opportunities, increasing tax burdens from supporting the entitlement state, declining incomes, and ongoing student loan debt, perhaps some will take universities’ glossy promises with a healthy dose of skepticism.