American Students are Graduating with More Debt than Ever Before

American Students are Graduating with More Debt than Ever Before

Although the recent tuition hike of 2.9% was the lowest increase in almost 30 years, the amount of debt students are graduating with is at a crippling high of almost $1.2 trillion, leading to lower life quality and later retirement.


A collective debt load of almost $1.2 trillion dollars is a number so large, it's difficult to comprehend because it's not something we use everyday—it's so big, it's hard to differentiate it between millions and billions; it all sounds the same. But putting that figure in perspective, it's 1/14 of the total United States debt ($17.1 trillion according to the average life expectancy of 78.61 years, that doesn't leave much room for retirement, a period where most people may be physically unable to continue working. USA News offers up some sobering statistics: a student graduating with $10,000 of debt and earning a salary of $55,000 can retire at 67, while a graduate with $40,000 of debt earning $45,000 in salary won't see their golden years until 75. Of course, this is a simplified calculation and doesn't take into account debt relief, inflation/deflation or job promotions and salaries, but it does give a rough idea of how far behind the 8-ball students are.

Further complicating matters is that it's less painful to take on that debt than to not. It's a well-documented fact that a person with a degree will earn more over their lifetime than a person with a high school diploma (approximately $2.3 million versus $1.3 million), leaving students with a bitter pill to swallow: take on a crippling debt that may push retirement almost out of sight entirely, or don't accumulate any debt but potentially live the rest of their lives in near-poverty.

On top of this tough choice for degree graduates is when to start saving for their retirement. The seductive choice is to pay off the student debt right away and be clear of it as soon as possible, but the earlier they put money aside for retirement, the better off they'll be for the future. Most pensions and retirement funds operate on a compound basis, meaning the longer the money is set aside, the higher it'll grow.

But with a $1.2 trillion debt tag, how much can students really afford to spend?

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