There’s a generational time-bomb ticking — and the student debt crisis is the trip wire.
Adults under 35 disproportionately bear the brunt of escalating inequality.
America’s educated youth are graduating into an economy with stagnant wages and a torn safety net. Federal and state budget cuts, meanwhile, have spiked tuition costs and cut public services that aid young workers, such as transportation and affordable housing.
A rumble of legitimate discontent is mounting from the 40 million Americans saddled with student debt totaling $1.16 trillion — a number expected to increase to $2 trillion by 2022. College debt now touches one in five U.S. households and exceeds total credit card indebtedness.
The most frustrated students are blocking highways over tuition hikes. Others are launching “debt strikes” by refusing to pay the for-profit schools that bilked them.
Many more are defaulting after facing the stressful realization that they can’t find a job that pays enough to repay their debt. Over half of outstanding student loans are presently in deferral, delinquency, or default.
The student debt debacle has huge implications for the future. The average college graduate is now almost $30,000 underwater, with some on the hook for over $100,000.
This debt keeps young people from starting families, buying houses, and taking risks on new businesses. It also exacerbates the growing problem of wealth inequality and declining social mobility, since it gives debt-free graduates from wealthier families an enormous head start over their peers.