Imagine starting your first full-time job after just graduating from college. You’re hungry to climb the ranks of the job market and make enough money to pay off your student loans.
Now, imagine yourself ten years after graduation: you are still paying off your college expenses and loans with no end in sight. You’re not earning much more than when you started out a decade ago.
Would you ask yourself, “Was college worth it?”
It’s a scenario that’s all too real for many Americans.1
Keep reading to find out why people are in so much debt and what you could do to help yourself escape this same fate.
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How Big Is the Student Debt Crisis?
The student loan burden in the U.S. is over $1.6 trillion. In the past, rising college enrollment rates and tuition costs were to blame. Today, the inability of former students to pay off their loans in a reasonable amount of time is the primary reason for the student debt crisis.2
Student debt consumes a significant amount of household budgets and burdens Americans more than auto or credit card debt.1
Over two-thirds of college graduates are in debt. That number is up from less than 50% of college grads in the early 1990s.1
Back then, the average balance was $9,000. Now, the average balance is $30,000, with a typical monthly bill of $400.2 For many borrowers, paying off student debt on top of their other living expenses is challenging.1
Stagnate Wages Slowdown Student Loan Repayment
One reason that student debt has continued to grow is because of slow repayment. But what causes the slowdown of payments? A huge factor is that wages earned today have the same purchasing power as they did in 1978. As a result, people take around 16 years on average to pay off their student loans. Just in 2013, the number of years people took to pay off their debt was less than 14.1
Majors Can Influence Return on Investment
Are the statistics above accurate for all graduates currently paying off their student debt? The answer depends on your field of study. In some areas, like nursing or teaching, your full-time earnings may be high, but the growth of those earnings may plateau faster than other careers.3
There is also the opposite problem—where initial earnings are low but could rise later in life. At the baccalaureate-level, degrees in psychology, fine arts, drama and English resulted in some of the lowest earnings to start. If you think that this issue only affects the liberal arts and fine arts, biology has similar statistics.3
How Can You Avoid High Student Debt?
How can you minimize student debt when pursuing a postsecondary education? Below are just two considerations that could help.
Choose a More Affordable College
If you research the price of tuition before it is time to apply to schools, you may have more time to make educated decisions on how much you need to attend. You might consider starting at a community college before transferring to a four-year university.4
When considering schools, look for programs that won’t leave you with a bigger student loan balance than the starting salaries in your chosen field. This is one reason why looking up the average income for graduates in different majors can be helpful to avoiding taking on unmanageable levels of student debt.4
Consider Trade School
With a large percentage of college grads struggling with student debt and regretting taking out so many loans, it can be a good idea to educate yourself on the different alternatives to college.1,5
If you are interested in a specific profession that requires certification instead of a degree, you may want to attend a trade school.5 For example, if you’re planning on working in the manufacturing or construction industries, you might consider a welding training program.
Make an Informed Decision about Your Education
The student debt crisis underscores the importance of doing your research before taking on loans for college, particularly comparing the cost of your education to what you could earn in that field after graduation.4
You might also consider weighing the pros and cons of different career preparation options, such as technical training versus college.