College sticker shock is probably stunning many parents as college aged students now sign their intent to register at thousands of schools across the country. You can almost feel the panic when Johnny or Suzie tells mommy and daddy she is going to University of Break the Bank while they watch their home equity plummet. What should be a proud time is now becoming a scary prospect for many parents looking at backbreaking student loan debt. If not the parent, many teenagers are looking at going into debt similar to taking on a mortgage without even owning a brick and mortar house. Many private schools now charge $50,000 or more per year in tuition and fees. Given that the average annual income for an American worker is $25,000 this one year cost is daunting. In the past if you picked the wrong major or school you ended up with a nice looking piece of paper and a likely opportunity to work in the blue collar world as a backup earning a relatively decent income. Today, pick the wrong career and school and not only do you have that same piece of paper but you also have limited prospects in finding even a basic job to service your college debt, forget about paying the rent or filling up your car with $4 a gallon gas. To expect teenagers to pick the right college and have their lives figured out early on is a bit much to ask. Students in the past did not have this same albatross hanging over their head. The big problem now is the massive cost of college.
Student loan debt outpacing all other forms of debt
Probably the most disturbing development in the last few years is with households deleveraging on mortgage and credit card debt there is a doubling down in student loan debt:
The above chart looks at the Sallie Mae portion of student loans on the government balance sheet. While total revolving credit has gone negative year-over-year since 2008 student loan debt has increased by 20, 40, and even 80 percent year over year.