Being a trendsetter across the globe, the United States has a lot of things to be proud of. Some people would even throw the phrase, “The American Dream” into this description. Unfortunately, even the trendiest run into questionable decisions. Beginning July 1 of this year, a new law will be passed that will double the interest rates of college loans from 3.4% to 6.8%. This increase will affect the over 7.5 million students nation wide that use Stafford Loans. To put that into a solid number, payments will increase by approximately $1,000. Some students will be discouraged to attend college, while those that persevere will struggle not only during their colegiate days but years and years (excuse me, decades) after they have received that diploma.
The beginning of the configuration starts with the choice of where to go to college. To go to a private school, or not to go to a private school, that is the question. Some advantages range from a high-quality education, smaller class sizes, and greater class participation. But when you weigh in limited major and graduate programs, and maybe the whopping $71,104 more you will have to pay to attend, the thought of a fancy liberal arts university doesn’t seem so appealing if you don’t have that golden ticket, i.e. a full-ride scholarship. Regardless of the debate between public and private, a typical college graduate carried an average of student loan debt of around $25,250, more than a quarter of a million dollars, in 2010.
So once you get the diploma, what’s next? Graduates dive into a job market where 1 of every 2 people is unemployed or underemployed. Median wages for those with a bachelor’s degree are down from 2000, which is the lowest level in more than a decade. What are the repercussions of this loss? Recent students are taking on part-time jobs unrelated to their career field, selling off their personal items to make a buck, and even moving back in with mom and dad. Not exactly what was in mind when you started to really think of your future at 18 years old.
Life does go on, though, and ends are met given the sacrifices of hard work. You find the person of your dreams and tacked onto the debt is a marriage, mortgage, cars, and kids. By the end of it all (retirement), your accumulated average debt is around $70,370. Ponder that along with the statistic that over $30 billion still owed in student loans by Americans over the age of 60. So, with the struggle to keep up with interest rates, what will a double increase lead to? To learn more, check out the infographic below, ‘The Life & Financial Times of The Average Joe.’