AP: Student debt situation is daunting

This is common sense stuff. Like going into debt for a car you cannot afford or a house you cannot afford. 

Bottom line: don’t go into debt for college. But if you must, only go in debt for a degree with a guaranteed payback (STEM). You aren’t paying back those $27k loans for a Women’s Study degree by working at Starbucks or McDonald’s. 

But whatever you do, don’t go in debt for a degree you will not finish. Finish what you start. 

From the Associated Press

More Americans are getting buried by student debt – causing delays in home ownership, limiting how much people can save and leaving taxpayers at risk as many loans go unpaid. The statistics look daunting.

Student debt now totals around $1.26 trillion. This amounts to a stunning 350 percent increase since 2005, according to the New York Federal Reserve. Not everyone sees that surge as troubling. President Barack Obama’s Council of Economic Advisers issued a report this year saying that the debt is beneficial because college graduates earn more money than people with only high school degrees.

But college drop-outs who borrow are increasingly less likely to repay their loans, as are former students at for-profit colleges that in some cases never provided the stable careers promised in their brochures. Nor are college graduates necessarily repaying their loans, a reflection of the stagnating incomes for many.

More than 60 percent of the class of 2014 graduated with debt that averaged nearly $27,000, according to the College Board. Not all that taxpayer-backed debt is getting repaid. Out of the 43 million Americans with student debt, roughly 16 percent are in long-term default -a potential hit in excess of $100 billion that taxpayers would absorb.

Studies have shown that student debt payments have led to a delay in home ownership, as well as a decline in college savings for the borrowers’ children – creating a multigenerational debt cycle.