Total student loan debt in the U.S. is expected to reach $1 trillion this year — more than the nation’s total credit-card debt.
“That’s a dramatic number,” said Donald Heller, director of the Center for the Study of Higher Education at Penn State. “But it’s a symbolic number. It’s not like student debt has doubled overnight.”
Both the student loan and credit-card numbers reflect the ongoing effects of the economic crisis. In 2008, two-thirds of bachelor’s degree recipients had debt at graduation, compared to less than half in 1993. More students have needed to borrow to augment their earnings and parental contributions, while tuition costs and other expenses have increased.
While student debt has risen since 2008, credit-card debt has dropped significantly during this same period. Lenders have tightened the purse strings, and borrowers have tried to pay down their debt.
Rather than the amount owed by all students, Heller says, the important number is the amount owed by any individual. The average debt at graduation last year was only $24,000. “Student loans are a good investment for most people,” he says.
According to the College Board, the average full-time salary in 2008 for someone with a bachelor’s degree was $55,700, versus $33,800 for someone with a high school diploma.
Good news for grants
Last week, the Senate voted to continue the Pell Grant — the most important source of
federal money for undergrads — at its current maximum of $5,500 per year. This overrules February’s House vote to cut it by $845.
The Senate did uphold the House vote to discontinue summer Pell Grants. This could affect nontraditional students, who often attend school year-round.
Follow Judy Weightman on Twitter at @JudyWEdu.