Late spring is commencement season, a happy time when college graduates throw off the yoke of academics, free to pursue the next chapter of their lives — and their parents breathe a sigh of relief.
That is, until they begin to realize the extent of debt they've incurred to earn a degree. The average student loan debt nationwide for the 71% of graduates who relied on student loans is nearly $30,000. Things are slightly better in California, an average of $20,000, thanks to our excellent public university system and a historic, if waning, commitment to public higher education.
"Once the glow wears off, this can be a stressful time for millions of students," President Barack Obama said Monday while explaining an expansion of his Pay as You Earn program. "And they're asking themselves, 'How on Earth I am going to pay off all these student loans?' "
Good question. Collectively, Americans owe more than $1.3 trillion in student debt, which is more than Americans collectively owe in credit card debt.
That is a tremendous burden on a generation already challenged with fewer job opportunities, shrinking wages and a tough housing market.
Each year, that load gets heavier. The cost of a college education has tripled in three decades, the president said. And, if trends continue, those numbers will climb — making this gateway to middle-class prosperity increasingly inaccessible.
In 2012, the most recent year figures are available, 1.3 million students graduating from a four-year college had student loan debt — an increase from 900,000 in 2004. The rise is due to a combination of factors: an increase in the cost of living, stagnating individual incomes and cuts to public colleges during the recession coupled with long-term disinvesment in public education.
The result is a massive transfer of current and future wealth from the nation's young to people who already are well off. We are mortgaging our kids' future, and it is not a path to economic prosperity.
The president's action last week will help, a little. It will allow people who already are paying loans to restructure them so monthly payments are limited to 10% of their discretionary income and will forgive their loans after 20 years, no matter how much they've paid back. That's not enough, though legislative efforts have been stymied.
There are an estimated 6.8 million people older than 50 carrying student loan debt, and there are untold numbers of parents who have taken out private loans and home equity lines, dipped into savings and 401(k) accounts, mortgaged their houses and maxed out their credit cards to help their kids pay for college. The amount is untold because that data can't be tracked in any meaningful way.
There is good news, however, in that student debt load is getting the public attention it deserves and igniting a bigger discussion about the rising cost of college. That's important because, while this isn't a national crisis quite yet, it has become a national shame.