Posted at 6:20 AM on October 27, 2011
by Paul Tosto
Filed under: Education
A college degree still opens doors. But even the biggest college boosters know the debt burden students increasingly shoulder isn't healthy. Especially in these poor economic times, it's been a struggle for some new grads to find work after graduating. But the debt must still be paid.
President Obama on Wednesday said he would accelerate plans to let students cap payments on federal student loans to 10 percent of their discretionary income. The White House said it could help lower payments for up to 1.6 million graduates.
Skeptics note the plan doesn't affect borrowers who took on loans before 2008. "If you are already in repayment and are not planning to take out new student loans, this plan does not affect you," writes Washington Post financial columnist Michelle Singletary.
We'll be chasing stories and perspective today on the struggles of many young people with debt. We'll dig deeper into President Obama's proposal and whether it will help. Join in the discussion. Post your experiences on student loans or contact us directly.
Here are some things we know this morning about college, students and debt.
1.) Many students are on an unsustainable path. Student debt skyrocketed the past decade as enrollment rose and college tuition costs soared. Students are borrowing twice what they did a decade ago after adjusting for inflation, USA Today reported recently using data from the College Board.
This chart says a lot.
The Atlantic magazine used the chart for an online post Wednesday on Obama's accelerated cap plan, calculating the "monthly impact of the president's new effort for most Americans paying off college debt will be between $4 and $8."
2.) Delinquencies are up, even in Minnesota. Minnesota's been among the best states where students pay their student loans on time. But the economy's taken a toll here, too. MPR News reporter Tim Post wrote recently:
Across the country 8.8 percent of students who started paying back student loans in 2009 defaulted. That's up from 7 percent over the year before.
The rate is lower among students in Minnesota, but it's also rising, having increased to 5.8 percent from 3.7 percent in 2008, according to Tricia Grimes, a policy analyst at the Minnesota Office of Higher Education.
"Nationally it also increased and everyone assumes it's because students are struggling to find work in this economy," Grimes said.
3.) Earning power is increasingly tied to education. It's tempting to chuck it all, find a career path that doesn't require college -- and the debt mountain that comes with it. The reality is the financial divide is only widening between those who earn a degree and those who don't.
People with a bachelor's degree now make 84 percent more over a lifetime than those who only graduated from high school, up from 75 percent in 1999, according to the Georgetown University Center on Education and the Workforce.
That median earning power works out to about $1 million more over a lifetime.