KISS OF DEBT
November 20, 2006
This generation of twentysomethings is straining under the weight of college loans and other debt, a crushing load that separates it from every previous generation, says USA Today.
According to an Experian poll:
- Nearly two-thirds carry some debt and those with debt have taken on more in the past five years.
- Although the percentage of people ages 22 to 29 with debt has declined, their total debt is up 10 percent, to an average $16,120 as of Aug. 1, compared with five years earlier.
- Overall, student-loan balances rose 16 percent to an average of $14,379.
- Revolving debt, including credit cards, surged 24 percent to $5,781.
- Total installment debt, including student and personal loans, rose 4 percent to $17,208.
In addition, debt has forced young people to change their career plans:
- Some 22 percent say they've taken a job they otherwise wouldn't have because they needed more money to pay off student-loan debt.
- About 30 percent say they've put off or chosen not to pursue more education because they have so much debt already.
- Around 25 percent have put off buying a home for the same reason.
Some in previous generations seem to feel little sympathy. But many do not realize the added burden of today's generation, says USA Today. For example:
- Average annual tuition at public four-year colleges and universities is $5,836 in 2006-07, up 268 percent from 1976-77.
- Student grants cover only 39 percent of the costs of a four-year college today, compared with nearly 80 percent in the mid-1970s.
- The percentage of students who borrowed for college jumped to 65 percent in 2000-01 from 34 percent in 1977.
- It takes a greater portion of the average income to buy a median-price home today. In 1970, it was 17 percent; in 2005, 22.4 percent.
Source: Mindy Fetterman and Barbara Hansen, "Young people struggle to deal with kiss of debt," USA Today, November 20, 2006.
For text (subscription required):
Browse more articles on Economic Issues