Student loan debt in the United States has now reached almost $1 trillion, and as a percentage of all household debt, it has doubled in the past 10 years. But is this a problem? N.C. State University economist Mike Walden responds.
“There’s no question that student debt has gone up. For example, the average debt of graduating students is now $26,000. That’s up from $19,000 a decade ago. A much higher percentage of students are carrying debt in the 6-figure range. Also, the default rate on debt has gone up.
“Now on the other side of the coin, that default rate was pretty steady until the recession. And actually we’re beginning to see as the economy improves that default rate go down.
“I think the way students should look at student debt is that it’s an investment. It’s an investment in their future. It’s a bet that, yes, they’re going into debt now, but that’s going to pay off for them down the road when they get a better job, and they’re going to be able to re-pay that debt as well as live a higher standard of living.
“So, I think what a student has to decide is (that) they’re going to make that work. They’re going to study hard. They’re going to get that degree. They’re going to do all the things that mean that that debt was really worthwhile taking out.”