Student Loan Debt Crippling the Future of U.S. Economic Prosperity
The student loan crisis may be even worse than it previously appeared. According to a recent study by FICO Labs, the size of the average student loan has jumped since 2005 when the average debt was $17,233. By 2012 the average U.S. student loan debt climbed to $27,253–a 58 percent increase in just seven years!
Not only are college students graduating with more debt than ever but the fiercely competitive job market is increasing their risk of defaulting on their loans now more than ever. The result of which has the potential to devastate our future economic prosperity. Three major areas of concern that have risen from our crippling student debt are:
- Stagnant innovation and job growth
- Job shortages due to outsourcing
- Loan defaults
Skyrocketing amounts of student loan debt greatly limits innovation and hampers job growth because graduates are forced to take the first job they’re offered in order to begin loan repayments. Often times, these jobs are low paying and have little to no relation to the degree earned.
Job growth becomes sluggish because graduates who have the dreams to pursue entrepreneurship cannot because they lack the funds to start up their own business due to large monthly student loan bills that needs to be paid. This poses a huge threat to the future prosperity of the United States economy because small businesses are the ones who create jobs.
Outsourcing is another area of concern regarding our growing student loan crisis in the U.S. We are no longer only outsourcing manufacturing jobs, jobs that often employ those without college degrees. Rather, we are also outsourcing an alarming amount of white collar jobs. A lot of college graduates are leaving the hallowed halls of higher education in pursuit of white collar jobs that are becoming more and more difficult to find.
When you think about it, much of our manufacturing industry is being outsourced to foreign countries. White collar industries, like the IT field, are being outsourced to places like India. This only further dilutes the options available to debt-burdened graduates desperate for a good job that doesn’t label them as underemployed.
Today, too many college graduates are finding themselves stuck with jobs as baristas and grocery store clerks—jobs that barely pay enough for gas and groceries, let alone massive student loan payments every month!
Another concern with the rising number in student loan debt is the alarming increase in student loan defaults. The report from FICO Labs shows that student-loan delinquencies saw a 22 percent increase in the past several years; the overall delinquency rate is now more than 15 percent! These defaults have the potential of leaving the U.S. taxpayer with the bill for hundreds of billions of dollars.
According to the head of FICO Labs, Andrew Jennings, “as more people default on their student loans, their credit ratings will drop, making it harder for them to access new credit and help grow the economy…even people who stay current on their student loans are dealing with very large debts, which reduces the money they have available to spend elsewhere.”
Clearly more needs to be done to address this problem. Contact Washington and ask what their doing to help fix the student loan crisis. Send this letter to your congressional representative and to ten of your friends and ask them to do the same!