The Student Debt Crisis: Are Things Getting Better or Worse?
1. Current State of Student Debt
The student debt crisis continues to grow with concerning statistics:
- Total student loan debt has surpassed $1.2 trillion
- Growing by $2,726 every second
- Average student loan debt for 2015 graduates: $35,000
- 11.8% of students defaulted on loans last year (no payment in 270 days)
- 19.7% of students are more than 31 days late on payments
2. Department of Education’s Optimistic View
The Department of Education highlights some positive trends:
- Hardship deferrals are trending down
- Forbearances are decreasing
- Defaults and delinquencies are declining
These improvements are primarily attributed to increased enrollment in income-driven repayment plans.
3. Impact of Income-Driven Repayment Plans
3.1 Growth in Enrollment
- 4.6 million direct loan borrowers enrolled in income-driven plans (December 2015)
- 48% increase from the previous year
3.2 Pros and Cons
3.2.1 Advantages
- Prevents student defaults
- Provides temporary relief for graduates
- Enables government to collect payments
3.2.2 Disadvantages
- Higher total interest payments compared to standard plans
- Doesn’t address root cause of rising college costs
- May encourage taking on more debt than necessary
4. The Root Cause
Recent studies suggest that easy access to loans actually drives up college costs:
- Law of supply and demand: Colleges raise prices as long as students can pay
- Flexible repayment arrangements enable higher tuition
- System creates a cycle of increasing costs
5. The Power of Education
The solution lies in better education about:
- Student loan realities
- Interest rates
- Job market prospects for different majors
- Making informed decisions about:
- Major selection
- College choice
- Financial planning
6. Moving Forward
We encourage students to:
- Look beyond one-size-fits-all rankings
- Focus on fit over brand name
- Consider alternatives to traditional four-year degrees
- Make data-driven decisions
Better access to relevant data is key to transforming the higher education industry and helping students make informed choices about their educational future.
by our College Data Analytics Team