The other day my road warrior travels took me to New England to a pre-wedding party for my son and his fiancée. After meeting everyone (boy, do they talk funny up there), a young man at the party struck up a conversation with me. He currently lives in New York City and graduated from a university three years ago.
This young man was quite knowledgeable about economics, despite being a liberal arts major and working in theater production. When he discovered I was a university professor, the conversation moved to his expenses as an undergraduate. He stated that the best education he received was at the community college level where he had close interaction with his professors. By the way, he felt that the community college education was very reasonably priced with a good value. He stated he was an honor graduate of a community college and decided to complete his education at a private university with a high price tag. To his disappointment, the university professors had other agendas besides teaching. Many of the faculty had taken early buyouts, and were replaced by less-qualified graduate assistants and part-time teachers.
His real dilemma was that in the final two years of his undergraduate education, his student loans accumulated to over $65,000, with few job prospects. Eventually, he found employment and is now saddled with high student loan payments, which have delayed both a vehicle purchase and the possibility of owning a home.
This young man is like many students, with collective student loan balances of approximately $875 billion nationwide. This compares to credit card debt of $700 billion and auto loans of $730 billion.
Thirty-seven million borrowers have outstanding student loan balances with 14.4% of student loan accounts past due. As with this young man, in many cases, parents and grandparents are co-signing, making them responsible for the debt. People over 50 are carrying $135 billion of student loan debt. Those over 60 have balances over $36 billion, according the Federal Reserve Bank of New York.
It appears that student loan debt is not only an issue for young people, but a senior generation issue, as well. This can place both generations in the financial jailhouse for a long period of time. The young man at the wedding party was very well aware of this fact.
Editor’s note: Dave Kohl, Corn & Soybean Digest trends editor, is an ag economist specializing in business management and ag finance. He recently retired from Virginia Tech, but continues to conduct applied research and travel extensively in the U.S. and Canada, teaching ag and banking seminars and speaking to producer and agribusiness groups. He can be reached at [email protected]