College dropouts and students who borrowed to attend for-profit colleges are at risk of default. Many Generation X parents—ages 35 to 50—are still repaying debt even as their children prepare to enter college and begin a second generation of family debt. Some millennials are delaying marriage and home ownership until their loans become less burdensome.
Three trends show how the pressures from student debt are compounding:
– FALLING INCOMES
For people with college degrees but no graduate school education, incomes, after accounting for inflation, have declined, reducing their ability to repay their loans. For a 23-to-29-year-old with a college degree, median income in 2013 was $41,000. That figure has plunged $5,000 in current dollars since 2000, according to Georgetown University’s Center on Education and the Workforce. The drop reflects a trend dating to 1970 of stagnant income for the college educated with no graduate degree—evidence that the supply of these workers has roughly matched employer demand.
Median incomes have risen consistently for one group since 1970: Workers older than 30 with graduate degrees. But even those gains began stalling before the Great Recession began in late 2007.
– MORE BORROWING
