Student debt apocalypse: Median wages up 1.6% over last 25 years while median student debt is up 163.8%.

Student debt is out of control.  Over $1.3 trillion in student debt is floating out in the current economic system.  Most of this debt is saddled firmly on the backs of younger Americans who coincidentally are also entering into a job market with incredibly low wages.  This idea of high tuition with low wages isn’t some made up propaganda to distract you.  This is reality.  The math behind this is all clear cut because inflation has eroded the standard of living of Americans to the point that the middle class is now a minority.  Student debt carries larger implications than merely paying for a college education.  Many younger Americans are unable to buy homes because of the amount of student debt they carry.  Many are also delaying bigger purchases because of the large debt they already carry.  This path is clearly unsustainable.  Just take a look at wage growth and total student debt growth over the last 25 years.

Student debt versus wages

One good way to look at student debt is through the lens of wage growth.  You would hope that student debt was growing at a pace similar to that of wages.  That is not the case.

Here is a chart showing wages and student debt over the last 25 years:

student debt

While median wages are up 1.6% median student debt is up a stunning 163.8%.  This is why we are seeing so many young Americans struggling and also why so many are rallying behind the cause of free public higher education. Of course the question as to how this gets paid is yet to be seen.

Over this period of time wage growth is simply not supporting the amount of debt being taken on:

student debt and wages

This is not good.  Since 1990 debt has nearly tripled as a share of the typical college graduate’s annual wages meaning it is tougher to service that debt.  Sure rates are low but who does this benefit?  Lower wages merely inflate the underlying asset, in this class a college education on the back of easy financing.

This is a problem.  All you need to look at is rising delinquency rates:

student loan distress

Student debt is now the worst performing debt sector in our entire economy.  This is a big problem and is something that needs to be examined more closely.  Student debt has allowed for a large growth in poor performing schools that merely seek to take in federal funding.  One perfect example is the for-profit institutions.  There are many that have come under fire recently for essentially serving as vectors to siphon off federal loans and leaving students with a worthless piece of paper.

Beyond the for-profits, many schools simply are underperforming for what they are giving to students.  Students continue to take on inordinate levels of debt simply to stay competitive in the current marketplace.

The student debt problem is a big one.  Back in 2004 total student debt stood at $260 billion:

total debt market

Today it is at $1.3 trillion.  So in a matter of 11 years student debt has grown by more than $1 trillion.  And some will try to argue that we don’t have a debt problem.

RSSIf you enjoyed this post click here to subscribe to a complete feed and stay up to date with today’s challenging market!     



Subscribe Form

Subscribe to Blog

My Budget 360

Enter your email address to receive updates from My Budget 360:

100% Private & Spam Free.


Subscribe in a reader


Popular – All Time

  • 1. How much does the Average American Make? Breaking Down the U.S. Household Income Numbers.
  • 2. Top 1 Percent Control 42 Percent of Financial Wealth in the U.S. – How Average Americans are Lured into Debt Servitude by Promises of Mega Wealth.
  • 3. Is college worth the money and debt? The cost of college has increased by 11x since 1980 while inflation overall has increased by 3x. Diluting education with for-profits. and saddling millions with debt.
  • 4. The Perfect $46,000 Budget: Learning to Live in California for Under $50,000.
  • 5. Family Budget: How to go Broke on $100,000 a year. Why the Middle Class has a hard time Living in Expensive Urban Areas.
  • 6. Lining up at Midnight at Wal-Mart to buy Food is part of the new Recovery. Banks offering Mattress Interest Rates. The Invisible Recovery Outside of Wall Street.
  • 7. You Cannot Afford a $350,000 Home with a $75,000 Household Income!
  • 8. Crisis of generations – younger Americans moving back home in large numbers. Student loan default rates surging largely due to for-profit college expansion.
  • 9. The next massive debt bubble to crush the economy – 10 charts examining the upcoming implosion of the student loan market. $1 trillion in student loans and defaults sharply increasing.
  • 10. Welcome to the new model of retirement. No retirement. In 1983 over 60 percent of American workers had some kind of defined-benefit plan. Today less than 20 percent have access to a plan and the majority of retired Americans largely rely on Social Security as their de facto retirement plan.
  • Categories