Lately, I’ve becoming more and more interested in the rapid rise of student related debt in North America. I thought I’d share some of the key notes.
All in, students owe over $1 trillion due to college educations. In August 2010, the volume of college related debt exceeded credit card related debt.
As shown below, Student debt has grown 511% since 1999. The graph below plots this as red, compared to the housing bubble (blue line).
Yes, that blue line really is the housing bubble that triggered a major meltdown.
As you can see, the U.S. has gone from around $90bn in student debt (1999) to over $550bn in student debt (2011).
The average debt per student on graduation is $23,186, as compared to $13,172 12 years ago.
Clearly the intake of students has not increased by 511%; this debt intake becomes much clearer when looking at the average 4-year college cost.
This graph stops at 2006, with an average college cost of $120,000.
The rather concerning trend line is the average increase in 4 year college education costs (including living), when compared to to the average increase in general goods and services.
With rising costs, I was interested in looking at what type of debt students were generally taking.
Note that this graph does not account for convenience users.
Comparing 2004 to 2008, student Credit Card debt increased on every key metric. At least 30% of college students are putting tuition related expenses on credit cards.
Taking a look at samples, Loyola University, North Dakota and Kentucky State have averages of 77%, 85% and 76% of their students paying tuition via loans respectively. Both North Dakota and Kentucky have average tuitions of under $8,000; clearly this is not isolated to high price institutions.
Part of this trend is due to students receiving less financial support from parents. Surprisingly, the average family with children in college spends more eating out ($3,102) than supporting education ($2,055).
The following graph compares cumulative College Credit to Insurance, Auto, Mortgages and other key financing arenas:
- As Daniel Indiviglio points out in The Atlantic, mortgages and home equity have increased threefold since 1990, as has household related debt. Meanwhile, student debt has grown six-fold.
Sources: Chart of the Day: Student Loans Have Grown 511% Since 1999, The Atlantic
Let College Students Get Into Debt, The Atlantic
The Debt Crisis at American Colleges, The Atlantic
Student-Loan Debt Surpasses Credit Cards, Wall Street Journal
Students Borrow More Than Ever For College, Wall Street Journal
Student Loan Debt Climbs, Wall Street Journal