By the way: Total student loan debt now topping one trillion dollars
posted at 1:21 pm on April 12, 2013 by Erika Johnsen
It’s a rough job market for anyone looking for work as we continue to just barely break stagnation levels in the Slowest Recovery Ever, but the picture is particularly bleak for the fresh-faced youths looking start careers. According to a new economic report, the situation is going to be “extremely difficult” for the crop of 2013 college graduates:
Unemployment remains high for young college grads. For those who will find jobs, many will probably have to settle for low-level positions, the Economic Policy Institute said Wednesday.
The unemployment rate for recent college grads between the ages of 21 to 24 has averaged 8.8% over the last year, according to Labor Department data.
Once you also include young grads who are working part-time for economic reasons, and those who have stopped looking for a job in the last year, the so-called “underemployment rate” is a whopping 18.3%. …
“On average, they are not going to do well,” said Heidi Shierholz, an EPI economist and co-author of the report. “They will face lower earnings, than they otherwise would have, for maybe the next couple of decades.”
The CNN article also notes that, as of 2012, about 52 percent of employed college graduates under age 25 were working in jobs that don’t even require a college degree, up from 40 percent in 2000. That means that a lot of those kids probably took on a heap of college debt — so not only are they not seeing any practical returns, but they’re short on the means to start paying back those loans… which, in turn, means that some of the burden is foisted upon their near-retirement parents, who in turn might have to delay retirement even longer… Dang. There are all kinds of vicious cycles spinning out of this mess.
We recently hit the one-trillion dollar threshold for combined private and student loan debt, and that number just keeps on climbing. Too many graduates can’t afford to pay back their loans, and many aspiring kids can’t afford to go to college without a loan — and they’re all going to be stuck with the accompanying economic consequences for some time.
“Student debt has a dramatic impact on the ability to buy a house, and to buy the dishwashers and the lawnmowers and all th eother purchases that stem form that,” said diane Swonk, chief economist at Mesirow Financial. “It has a ripple effect throughout the economy.”
“Combined private and federal student debt doubled since 2007 to $1.1 trillion, according to Consumer Financial Protection Bureau and New York Federal Reserve data, as parents became less able to fund educations in the years following the 2008 financial crash. Homes lost about a third of their value while prices tumbled, leaving many owners owing more on their mortgages than their properties were worth.
Sidebar: Time to rethink a traditional four-year college degree as a necessarily wise investment?