As a society, student debt feels like a 1.5 trillion pound guillotine blade hanging over 43 million of us, and for me personally, it makes me see red every time I make a financial decision.
But strangely, student debt is both better and worse than what we think it is. So just like this celeb college bribery scandal is revealing some things we didn’t get about super-rich parents, let me reveal 3 things nobody gets about student debt.
1. It’s not just a millennial problem.
Baby boomers are the fastest-growing category of student debtors—their debt load has increased by 70% in the past 5 years.
That’s what happens when the media and government chant “learn to code” in response to a shifting economy. A lot of older people went back to school at a time when college is way more expensive than they could have imagined when they were college-aged.
— Alex Rampell (@arampell) February 6, 2019
Also student debt-heavy millennials weigh down their boomer parents. A lot of these parents must step in to help pay down their kids’ balances, or help with rent or big expenses. If your parents are sacrificing for you to just make it, they’ll miss their own financial goals as they get even older.
A lot of boomers admit this is the case:
Even if debt-laden boomers see their incomes rise along with their newly acquired coding skills from school, they have fewer years of earnings ahead of them so they have to pay their debt off faster.
But what about the people who have student debt but can’t count on increased earnings from a degree?
2. Not everyone who has student debt graduated college.
People who went to school and dropped out are basically invisible in conversations around student debt.
I went to an expensive private liberal arts school for college (and yes, I hate 18 year old me for that) and the first two years there were a war of attrition—every semester tons of kids got kicked out, failed out, or couldn’t afford to keep going to school. Many people stop going to school to take care of sick parents or deal with family emergencies.
When life plans screech to a halt, debt collectors don’t.
I know a lot of these kids didn’t end up going back to school, but they still have the student loan bills without the increased earnings of a college degree to show for it.
Think about these people when you hear education evangelists say student debt is the means to a higher income end.
Maybe, but only if you finish school. There are millions who don’t, and as The Basis Point team learned at Goldman Sachs last week, two-thirds of people who default on student loans borrowed less than $10k.
This means they didn’t finish school and get the higher-income benefits of a degree.
3. Not everyone needs a college degree.
This isn’t a new point, but it bears repeating. If everyone has a college degree, they don’t mean as much.
Of my grown siblings, my brother who didn’t go to college, is the most financially secure of us, and as a tire technician, has a skill that will remain relevant through any economic cycle.
Life can be good without a degree.
Ok so now that you get these 3 things about student loans, let me offer 3 conclusions:
1. Yes, 43 million student loan borrowers is a lot, but there are 70 million millennials AND 70 million baby boomers, so student debt isn’t as apocalyptic as you read about in BuzzFeed.
2. I only half joke about seeing red above now that I know how to free my mind from the matrix of bullshit headlines.
3. Thanks for attending today’s lecture. Now you can get back to the rich people college bribe scandal. Your assigned readings are below.