Student Debt and Consumer Costs
08/02/2006
Executive Summary
Higher education in America continues to be
critical for both individual success and the
economic and political health of our country.
While college attendance has grown over the past
two decades, state appropriations and federal aid
have failed to keep pace with the rising cost of
college. As a result, more students than ever
must rely on student loans to pay for a four-year
degree and start their post-collegiate lives with
significant debt.
In fact, student loan debt is rising faster than the cost
of living or health care costs. Between 1993 and
2004, the average debt for college graduates with
loans increased by 107% to $19,200. At the
same time, in the Boston area, the cost of living
increased by 37%, and health care costs
(including insurance, drugs and medical care)
increased by 74%.
Two-thirds of college graduates in 2004 finished
school with student loans. After student loan
interest rates increase significantly in July 2006,
many borrowers will find it even harder to afford
necessities such as health care, rent and groceries
because of higher loan payments.
High debt can affect where graduates live, the
kind of careers they pursue, when they start a
family or purchase a home, and whether they can
save for retirement. The combination of high
student debt and low earnings can lead to default,
ruined credit and wage garnishment.
To reduce student debt and ensure that higher
education remains within reach for all Americans,
we need to increase need-based grant aid; make
loan repayment fair and affordable; protect
borrowers from usurious lending practices; and
provide incentives for state governments and
colleges to control tuition costs.
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