Average student debt for college is now $26,500. That is up 5% from last year.
As with almost everything else in life, Pareto’s 20-80 rule governs student debt. About 20% of students with debt carry 80% of this debt.
Median debt is half this: about $13,600. Half owe more; half owe less.
What the stories rarely tell you is this: of the $1 trillion owed by these students, $850 billion is owed to the United States government. The rest — $150 billion — is owed to banks.
What’s that, you say? You mean that the United States government lured these students into this tar pit of debt? That’s correct.
Then the solution is for the United States government to stop lending money to college students. But, of course, Congress will not admit this. The voters want the programs.
A government agency has issued a warning about the destructive effects of this debt on the overall economy. The agency is really warning the public about a problem created by the government. Conclusion: The right hand knoweth not what the left hand does.
Here are other little-known facts about student debt in the United States.
How many students are in hock? 37 million.
How many of these are under age 30? 14 million. So, debt is mainly a problem for mature adults, not kids.
What is the average (not median) starting salary for graduates? $44,000+.
What is the average unemployment for college graduates? 4.6%.
How many of these are minimum wage jobs? 280,000.
Conclusion: the media’s horror stories on the rotten job market for college grads are misleading.
What percentage owe under $6,000? 25%. This can be easily paid off.
What percentage owe $100,000 or more? 3%. So, the horror headlines apply to very few students.
Conclusion: to the extent that the student loan crisis really is a crisis, it is a government-created crisis.
It could be solved easily. First, the government passes a law allowing student loan bankruptcies. The private sector law would remain the same: no bankruptcy protection. That would eliminate 85% of the problem. Second, the government shuts down Sallie Mae and all other student loan programs.
Will the government take either step? Of course not. So, will the crisis go away? Of course not.