Gallup: High Student Debt Results in 60% Worse Financial Condition

Gallup: High Student Debt Results in 60% Worse Financial Condition

The Gallup polling organization found that Americans who graduated from college between 1990 and 2014 and are saddled with $50,000 or more in student debt suffer 60% worse financial well-being and 38% worse physical well-being than their peers who graduated with no debt. 

The poll also found that American college grads with high student debt suffer lower well-being scores for purpose, social and financial, and community well-being than debt-free graduates.

The study reveals that Americans who graduated college between 1990 and 2014 with high student debt suffer lower scores and “face long-term challenges that stretch beyond just their finances.” As shown in the chart below for the period of 1990 to 2014, higher levels of student debt load resulted in lower scores for thriving in each category:

Category

No Student Debt

$25,000 or Less

$25-50K Debt

Over $50K Debt

Purpose

49

46

40

40

Social

47

45

42

45

Community

43

42

35

38

Financial

40

31

26

25

Physical

34

30

26

24

The category with the least impact for no student loan debt versus their indebted peers is social, where the differences are not statistically significant. This does seem to prove that college provides all undergraduate students excellent training in social skills.

But Gallup found “stark differences among these groups in the areas of financial and physical well-being.” The deeper the graduates went into debt to obtain their college degree, the worse their financial and physical well-being. For financial well-being, the highest indebted graduates scored 15 points lower, or were 60% worse off. For physical health, the highest indebted graduates scored 10 points lower, or were 42% worse off. 

About 59% of degree earners between 1990 and 2014 in Gallup’s survey reported that they graduated college with debt associated with their college expenses. About 27% borrowed under $25,000; 21% borrowed between $25,001 and $50,000, and 11% borrowed more than $50,000.

The average cost of college tuition and fees rocketed up by 1,120% since records-keeping began in 1978. College costs grew twice as fast as medical expenses, four times faster than the consumer price index, and almost five times faster than the cost of food. As of the latest government report for the 2012 year, total tuition, fees, room and board rates for the average full-time undergraduate student in a degree-granting institution was $23,066.

Borrowing for college over the last five years more than doubled, from $640 billion in 2008 to $1.24 trillion in the most recent filling. But the default rate more than doubled in the same period, from 7% to 14.7% today. The total amount of student loans over 90 days delinquent rose from $41 billion in 2008 to 182.7 billion today

President Barack Obama, surrounded by a gaggle of Educrats on June 8th said, “At a time when higher education has never been more important, it’s also never been more expensive.” But he justified going to college as a “smart investment.” 

“But the wisdom of the investment in college is often framed in terms of the economic benefits a degree can bring, rather than on a broader set of criteria, such as whether a college degree — and its associated costs — leads to a rewarding, healthy life in the long run,” according to Gallup. Studies now show that high college debt can result in long-term impacts, including deferral of marriage and homeownership.

With the recent huge increases in student loan borrowing, and the fact that most graduates apply for the up-to-three-year deferral after graduation, the outstanding balances and default rates for college student loans will accelerate. With about 40% of Millennials still in school, future well-being scores for this generation of highly indebted college graduates will continue to fall.

The author will respond to comments by readers.

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