Student Loan Debt ...

... and the American Dream

Apr 11, 2022

Since the deadline of Feb. 15, we and many others have carefully reviewed scholarship applications of nearly 300 Northshore graduating seniors who are in search of financial help for their dream of college. Applicants are asked to explain how they will pay for college.

This year more and more are checking the box – Student Loans.

Applicants are relying on scholarships to bridge the financial gap. Finalists interviewed seem adamant about not incurring student loan debt. In today’s Newsletter, we provide some comprehensive Facts surrounding the impact of mounting student loan debt. Foundation trustee Eric Greenwood compiled the following:

The Facts:

Americans now owe an estimated $1.7 trillion in total student debt.

· 1 in 4 Americans have a student loan for an estimated 44.7 million people.

· Average student loan debt is $37,172

· Average student loan payment is $393 per month which is 55% higher than a decade ago.

· In 1971, the average cost of one full year at a public university was $1, 410 that represented 15.6% of median family income and was manageable for most families without going into debt.

· In 2018, the average cost of one year in a public university was $21,370 which was 34.8% of median family income. This result is why more than 70% of bachelor’s degree recipients emerge from college with substantial student loan debt.

· In a recent survey, 41 percent of people with student loans said they would not be able of afford a surprise bill of $400. Money worries can take a heavy toll on health, work performance and relationships.

· 30% of student loan borrowers move back in with their parents.

· 34% of borrowers delay starting a family because of their debt.

· 73% of borrowers have delayed saving for retirement.

· 63% of borrowers have delayed buying a home.

· 28% of borrowers have delayed getting married.

The Student Loan Impact

Men and women laboring under student debt “are postponing marriage, childbearing, and home purchases and …pretty evidently limiting the percentage of young people who start a business or try to do something entrepreneurial” said Mitch Daniels, president of Purdue University.

Considering homeownership. The National Association of Realtors found that 23 percent of first-time home buyers said that it was hard for them to save for a down payment with 57 percent of this group saying that student loans were impeding their savings.

Additionally, an economist with the Realtor Association noted that mortgage lenders factor all debt obligations, and student debt counts toward total debt which means that borrowing capacity for student loan borrowers can be downgraded.

While college degrees can provide 60 percent higher income than a high school diploma, student debt load unfortunately can alter career choices. The need to repay loans is steering some students away from professions like social work and early childhood education towards higher paying jobs in tech and financial services.

At the Scholarship Foundation of Northshore, we believe that scholarships are the golden ticket, as a college or vocational education after high school is the best way to get ahead in America. Scholarships can reduce or eliminate student debt that can create a lifelong repayment burden.