Twenty-somethings today owe a record amount of student loan debt – and they are stuck in a weak job market that does not give them the opportunity to pay off their debt.
Total student loan debt among borrowers under age 30 has more than doubled since the beginning of 2005.
The amount has reached $292 billion, as of the end of March, according to data released by the Federal Reserve Bank of New York on Tuesday.
The average individual student loan debt amount for borrowers under age 30 is $20,835.
That amount, which is also from the end of March, has risen 56 percent since the beginning of 2005 to a record $20,835. According to the FinAid loan calculator, it would take 11 years for a borrower with that salary and the average student loan balance of $20,835 to pay off his or her student debt.
The slow economy has been consistent with a student loan boom.
Overall student debt has climbed to a staggering 148 percent since the beginning of 2005 to $902 billion, as of the end of March, according to the New York Fed.
Colleges are equally at risk as the students during these harsh times. If students can’t pay their loans, colleges are in a lot of trouble because they’ve become dependent on them.
Colleges say they are bystanders to the problem, and it is the government’s and private lenders’ responsibility to take care of defaulted loans.
With the lack of accepting responsibility, inability to pay, and high risk business decisions; it may only be a matter of time until student loan debt becomes the next mortgage crisis, which put the U.S. into the Great Recession we’re still battling today.
The rise in debt is in part due to colleges slashing scholarships.
Just 35 percent of families paying for college received a scholarship in 2012, down from 45 percent in 2011, according to a study released on Monday by Sallie Mae.
Meanwhile, 34 percent of all families paying for college took out federal student loans this year, up from 30 percent in 2011 and 25 percent in 2009.
Dean Baker, co-director of the Center for Economic and Policy Research, findings say:
Instead, risk-averse employers have handed 58 percent of all new jobs over the past year to workers age 55 and older. This leaves many young people to out-to-dry without developing job skills that they need for boost their earnings in their future.”
In June, according to the Labor Department, the unemployment rate remains significantly higher among 20-34 year olds than the rest of the population, marking 4.8 million people in that demographic as unemployed.