As many of us probably already know, tuition doesn’t seem to be going down any time soon. It’s becoming less and less surprising in the U.S. that student loan debt is now the biggest percentage of all non-housing debt.
It was ordinary to see older generations working their way through college, paying for their expenses, and graduating with little to no student loan debt. Forbes recently reported that this goal is “virtually impossible for the current crop of students and recent graduates” as opposed to Baby Boomers and Generation Xers attending college in the past.
The increase in the price of college and a wage growth deficit are some of the reasons why millennials now face record levels of student loan debt, said Forbes.
Including tuition, room and board, and additional fees, “the average cost per year for the 2015-2016 academic year was just over $19,000 for a public four-year university,” Forbes stated. “The figure jumps to nearly $40,000 for a private university.”
The total cost of attendance for four years reaches easily over $100,000 since the average cost for all four-year institutions is $26,120 each year. Compared to costs back in 1989, the cost for four years was about $27,000 (roughly $53,000 adjusted for inflation). It’s an interesting reality to see that the cost of college almost doubled since the 80’s – even after inflation was taken into account.
An argument might be made that wages also increased with tuition. This is true, but not nearly at the rate one would expect.
According to the Federal Reserve Bank of St. Louis, Forbes reported, “the average annual growth in wages was only 0.3% between January 1989 and January 2016. That’s right, the cost to attend a university increased nearly eight times faster than wages did.”
This whopping statistic only continues to show the harsh reality of what the average college graduate has to face when entering the work force, diving into a seeming abyss of student loan debt. Not only is it a disadvantage when looking for career without a college degree, but also when having a ton of expenses to pay back as graduates are just starting their careers.
“There is a tremendous disconnect between the rising costs of education and the flattening of wages, which is only making it harder for graduates to make ends meet while paying back staggering amounts of student loans,” added Forbes.
At the end of the day, it’s recommended to get an education at a practical cost and to choose a career with a high return on investment. Read more to get tips on how the next generation of students should approach financing their education.
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