Currently in the United States, 44 million Americans owe $1.56 trillion worth of student loan debt. This is a number that is set to continually rise and hit the $2 trillion mark in the next few years. Everyone knows that were at a crisis level with student debt, yet colleges don’t care. They continue raising tuition through the roof and is forcing many young millennials to think twice about going to college.
TD Ameritrade worked with The Harris Poll to take a look at the impact of the student loan crisis and how it was affecting students today. This amount of debt is doubled only in the last decade. This is the first time we’ve really seen this change to where debt is accumulating more rapidly than it ever has before. In a short amount of time.
The pull over 3000 students from the youngest two generations, Gen Z who is entering college for the first time, and younger millennials who are nearing graduation. The study was called the 2019 Young Americans & College Survey. Looked at finding out whether there’s been a major attitude shift towards going to college. Of course, the answer is yes, there’s been a massive shift.
We used to believe that when she graduated high school you went on to college. Going to college was necessary and it was expected that you do so. Not going to college equated to making much less money and being one of the poorest Americans living paycheck to paycheck. There was no understating the value of a college education.
The Massive Shift
As the Great Recession hit the economy over the past decade, many millions of Americans found themselves without work. They thought would many people do when they graduate high school. They’re desperate to find work and felt that the only good, quality work out there required degrees. The problem is, colleges knew that people were desperate to make more money.
Many schools have been caught lying and making promises about job placement rates. They pushed ads into the American mainstream and it enticed millions of people to go back to school. When it was found that of the schools lied about their job placement rates to get more people in the door, that this meant that there are more people with outstanding student loan debt and no job to pay for it.
While this is happening, colleges are raking in billions and billions of dollars. They keep dramatically increasing the cost of tuition while siphoning off money from the government. It’s almost as if the entire education system decided to become crooked and value profit over anything else. The youngest generations are seeing this happen and are deciding not to stand for it.
Putting Off College
While college is still seen as a must after high school by most, it seems as if the shift is starting to take place. 25% of young students are deciding to put off going to college according to the survey. The main reason why this is happening? Cost. 1-in-5 don’t believe they’ll ever go to college. It’s not worth the investment for them.
Going to college is almost the equivalent of financing a brand-new car. You find yourself tens of thousands of dollars in debt and making payments, including paying attentional interest, for the next 10 to 20 years of their lives. This type of arrangement is hurting millions of lives, as many young adults are putting off making major life decisions, like getting married and having a baby. They simply cannot afford to do anything but live as cheaply as possible while paying off their student debt.
“There are some students who are saying a four-year traditional degree may not be for me,” Dara Luber, TD Ameritrade’s Senior Manager of Retirement, told Yahoo Finance’s YFI AM on Tuesday. “There’s always going to be a need for those who go to trade schools. So, there could be a shift in how you’re approaching life after high school.”
This study found that 20% of all young millennial’s out there have over $50,000 worth of student loan debt. The students are also expected to be paying off this debt well past the age of 50. That shows that there are less people able to pay their debt and more were going into default.
“More students are seeing the need to not only go to college, but I think part of the increase in the debt is also the need or the feeling that you need to go on to go to grad school to achieve the right job,” Luber said.
“They [parents] understand what it is to have to pay back those loans, and how much it could impact not only for themselves, but for their students, future retirement savings, being able to buy their first home, get married, and have children. All those downstream impacts of having to pay back their student loans when they get out of college,” Luber said.