Home > B1 > Student Loans and Their Implications on the American Economy

Student Loans and Their Implications on the American Economy

With everyone left in our Economics becoming seniors next year, the looming beasts of college and student loans are fast approaching.  Even after college, the fear of having to get a job to help pay off the loans almost seems more daunting.

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Thinking about the Burden of Student Loans

In today’s economy, it almost seems like a better idea to not go to college as to not have to pay off the student debts.  However, this would leave young people in a precarious situation of not having a good enough job.  This would lead to a decision between a high school diploma with a weak job or a college degree, student debt and a much stronger job.  With those students with debts, it kills their credit scores and makes it nearly impossible to get a mortgage or a car loan or any other “big ticket” items.  The whole aspect of student loans is sending “a whole class of people out into their professional lives with a negative net worth. Not starting at zero, but starting at a minus that is often measured in the tens of thousands of dollars. Those minus signs have psychological impact, I suspect. They might have a dollars-and-cents impact in what you can afford, too” (NY Times).  Students have  now become very burdened by a load that seems almost impossible to pay off.  While it might seem like an economic death wish to enter the economy after college with such a large amount of debt.  However, in today’s economy employers are more likely to hire a candidate with a college degree than without.  Therefore, it becomes a weighing of cost and benefits between a high school diploma and no debt or a college degree with large amounts of debt.

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In 2012, about 60 percent of college students borrow a student loan.  ” There is roughly somewhere between $902 billion and $1 trillion in total outstanding student loan debt in the United States today” (American Student Assistance).  About $85 billion of this total is past due.  Despite all these economic statistics working against them, “in 2010, young adults ages 25–34 with a bachelor’s degree earned 114 percent more than young adults without a high school diploma or its equivalent, 50 percent more than young adult High school completers, and 22 percent more than young adults with an associate’s degree” (National Center for Educational Statistics).

High school seniors who are on the fence about attending college must weigh their costs and benefits and  look at their personal interests.  On one hand, they cannot go to college, not go into large amounts of debt, and enter the workforce at a net worth of zero.  On the other hand, they can go to college, get a degree that can get them a high profile job,  and enter the workforce with a large amount of debt.  Some students who would go into large amounts of debt, may want to be a doctor, actor, business or whatever their heart desires.  Those students have to weigh the benefits of following their dream against the costs of attending college.

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Doctor in Debt

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Man at “McDonalds”

Students who are graduating  now face a choice, being a doctor who followed his dreams but is in debt or a man working at McDonalds with little chance to obtain a high profile job.


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  1. May 28, 2013 at 2:15 pm

    Well done, Will! I thought you might enjoy reading the 1-paragraph abstract of this reseach study: http://qje.oxfordjournals.org/content/117/4/1491.short

    Have a great summer!

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