United States of Crisis:
Student Loan Debt is Suffocating the Millennial Generation
by Mona Maclay
The total amount of student loan debt in the United States grows $2,726 per second according to MarketWatch. At the end of 2015, student debt was reported at 1.3 trillion dollars, held by 40 million people across the U.S. In the State of Illinois 67% of young people have an average of $28,984 in student loans (as reported by the Institute for College Access and Success). It is with nearly $30,000 worth of debt that new workers are entering the economy.
I spoke with Dan O. (27), and Rosemarie V. (24), to illuminate the human side of the student loan crisis. (They preferred not to be identified by their full names.) Dan attended the least expensive public university in his state for his bachelor's degree; he graduated with $22,000 in student loans. He expressed how the baggage of student loans has kept him from saving for retirement and exploring the City of Chicago, where he now lives. He also doesn't receive health care from his employer and has been unable to afford to purchase it this year. "I budget for my student loan payments. I have had to work aggressively to pay them down faster." Even with his mind on his money, Dan sometimes is in the position of having to choose between paying his rent or paying his loans; when he pays both, it sometimes results in an overdraft fee from his bank. "College should be more affordable," Dan states, "and interest rates should be lower." Dan currently has $11,000 remaining in student loans.
Rosemarie V. attended a prestigious private liberal arts college and graduated in 2014 with $60,000 in loans. She has yet to work in a job that requires a four-year degree. This has made her wonder if the education she received was even worth it. "What was the point?" she asks. She has ten loans total, one with an interest rate of 6.8%. "When I look at my bills, it is so depressing... 30%-43% of what I am paying goes toward interest." Rosemarie is trying to pay more than the minimum payment each month; she lives with her parents to save on living expenses. "They [the loans] force me to prioritize things I normally wouldn't, like always looking for a higher paying job, rather than one I'd actually enjoy doing. There are other things I would like to do: like move out, or get married eventually and have a family. I feel like I have less freedom to do things because I don't want to add financial pressure." Rosemarie now, 2 years after graduating, has $44,269.63 in student loan debt, but the amount over time will be substantially more when you factor in interest.
Neither Dan nor Rosemarie has been able to contribute to any retirement savings. They are focused on paying back their student loans. "I can't save for the future, it's nearly impossible to save for retirement when I am paying off these loans," Dan says.
Many economists are saying that this student loan bubble is a disaster waiting to happen for the economy. There is some good news: Forbes recently reported that student loan interest rates have fallen to a ten-year low. However, this doesn't change the fact that some people are still paying interest rates of over 6.31% on their loans, and that even with lower rates, new graduates are still struggling to make their payments.