Once unthinkable, many in the middle class wonder if college is a necessity for their children when they weigh the costs versus the benefits. The average student loan debt after attending a four-year college or university has risen to $23,200. That will rise to $30,000 on average in the near future should costs continue to rise at the same rate.
The tides seem to be changing on the automatic decision to seek a college degree after looking at the job market post-graduation and entry level salaries. Michael Barone, writing in the Wall Street Journal talked about one expert who calls the situation, "the higher education bubble".
It has been created by a decades-long increase in costs that has outpaced inflation, fueled by billions funneled into the market by government subsidized loans. Coupled with the promise that no longer seems to be there that, loading up on debt to get a degree will payoff handsomely in the long run, and a bubble seems to upon us.
Entry level salaries can exceed ability to repay student loans.
For the first time in the country's history, Americans' student loan debt exceeds its credit card debt. People have been encouraged to pay down expensive debt that comes along with high interest payments and many consumers have followed that advice. Banks have cut off credit to those deemed unworthy and lower credit limits have been imposed on others. Full story, here
The consequences of failing to pay student loan debt are more dire than most expect or understand. Most if not all student loan debt cannot be eliminated by a bankruptcy proceeding. When government loans go into collection, a hefty fee is added to the balance that can be as high as 10% of the outstanding balance.
By taking a realistic look at job prospects post-graduation, a student can get a snapshot of his or her ability to repay the costs of loans for a four-year degree. It is recommended that a monthly payment to repay student loan debt should not exceed 10% of a graduate's average monthly income to enable repayment to be made without significant interruptions.
Somewhere in the last three decades, American businesses started to require college degrees for entry level jobs in many industries, when none are truly necessary. The lack of excellent oral and written skills, as well as math competency of the average college graduate aren't instantly remedied by college attendance. The inability to excel at college leads many, particularly in the minority communities to dropout leaving students with loan debt for a failed experiment.
The Washington Monthly published a list of what it called "dropout factories" which provide a cautionary tale for parents determined to push their kids into college no matter the prospect of success in school or the ability to repay debt upon graduation.
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