Student debt outstanding has tripled since 2005 — soaring past 1.5 trillion earlier this year, according to the Federal Reserve. Furthermore, one in six borrowers has a debt burden that exceeds their annual income, leading to a long-term savings crisis that has the potential to explode in the future as 65% of those who owe money to Sally Mae have less than $1000 in savings.
According to a similar national survey of indebtedness from student loans from the nonprofit organization Student Debt Crisis and the startup Summer, the average debt burden among respondents was $80,000, while the income of the average respondent was $60,000. The nationwide average is lower — with average student indebtedness for the class of 2016 standing at $37,172 — but the survey is an important source for street-level data on the student debt crisis, as it chronicles the everyday financial strain created by high monthly payments and carrying anything form a large car payment to a small mortgage without an asset to go with it.
The implications of both studies’ data are troubling. The largest borrowers have taken on the equivalent of a small mortgage but have no asset to show for that investment, and even the median borrower has a debt burden greater than half the average household income in the United States. These obligations no doubt contribute to the decline in mobility over the past few decades — if you have $35,000 in debt and nothing saved, it is hard to move your family across the country for a new job.
Even further up the chain of causation, large student debt burdens are almost certainly one of the main reasons young people are delaying getting married and starting a family. If both partners have taken on the median amount of student debt, then the debt burden for the new family is already $70,000. It is no wonder young Americans are putting off marriage when the first day will sound like this: “congratulations to the happy couple, who now together owe $880 per month for ten years. Payable to the federal government, in order to cover principal and a 7.5% rate of interest on their liberal arts degrees.” That is $880 per month before kids, before car payments, before a mortgage payment, and before any savings — it is not poverty, but it certainly is not easy to swing that and raise a family on $1180 a week.