A student who takes out $53,000 in debt, the average amount for those attending a four-year public university, will experience a a lifetime loss of wealth totaling $208,000, according to a new report from the think tank Demos. It dives into the long-term costs of rising student debt and finds that for those who carry the $1 trillion in total student debt, their lifetime wealth loss will equal $4 trillion. Students from low-income families and minorities are affected the most because they proportionally take on more debt.
College is still an important part of socioeconomic mobility. But the report shows that taking on such high amounts of debt will hurt both in the short term and in the long term. Those without student debt are able to save for retirement faster, buy more expensive homes, and have lower mortgage payments than those who have to repay loans.
The short term effects of student debt have been felt by many. Record rates of default, a lack of full-time, well-paid jobs, and the inability to buy their own homes are just some of the issues recent graduates are facing.
But data shows that saving for school, even in small amounts, can have a huge impact on graduation rates. Politicians and legislatures are catching on. Programs are being discussed to help prevent student debt from piling up for future generations.