Boomers claim that they worked their way through college, and if they did get loans, paid them back without complaint. But this meme, comparing tuition and the minimum wage in 1970 and 2018, clearly illustrates the different economic realities.
The student loan crisis has been in the news lately. Federal student loan payments that have been suspended during the Covid-19 pandemic will start back up on January 31, 2021. Should Congress pass student loan relief? Cancel student debts? Let’s explore some facts about student loans.
Looking at this information, why is it that Boomers keep asking what is wrong with Millennials? That they want something for nothing? The oft-heard complaint decries the entitlement of the younger generation. The facts show the grim economic reality.
What about my student loan?
I decided to look up the tuition I paid when obtaining my degree in 1980. You can see that it was possible for me to work about ten hours a week and keep up with tuition and fees. In fact, I did have grants and a loan, since there's one more component of college costs: room and board.
By 2000, tuition and fees had shot up to $4665, almost a six-fold increase. In 2020, it's no longer possible to "work your way through college." The plight of Millennials with student loan debt is clear.
What about interest rates? In the late 1970s, interest rates on National Direct Subsidized Loans (NDSL) were very low compared to interest paid on savings. My loan rate was 3% at a time when my bank account was earning an incredible 11%. Even though I worked as a waitress and had some work-study payments, I needed a $2000 loan for over four years for living costs. That's a very affordable $500 per year. Look at my loan payment statement.
My payment was $30 a month. I would pay off my loan in about six or seven years, at age 29. There are many today in their 30s, 40s, and 50s that are still paying for their education. Parent Plus loans are charged at an even higher rate, saddling two generations with college debt.
Today, student loan debt is the second-highest consumer debt, behind mortgage debt. I was stunned to find out that the average payment for a student loan is $393 per month. If you first entry-level job pays $14 per hour, that payment takes 16% of your gross pay. Double that percentage if you are working minimum wage. That is a staggering amount for young people starting out. Car payments can be cheaper - and only last 5-7 years. The total US student debt is $1.6 Trillion owed by 46 million borrowers.
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