TEMPLE, Texas — The average undergraduate takes between 5 to 5 and a half years to graduate college. That's a long time to pay the bill for a degree. There are ways to cut down on the time spent in college, which could mean lower costs.
With high schools offering dual credit and the ability to test out of classes, the freshman year of college is becoming almost obsolete. If you can get out of college in three, or a maximum of 4 years, a lot of money can be saved. If not, you're more than likely be living in a smaller house or driving an older vehicle.
What does student loan debt mean for the economy?
Federal student loans are the only consumer debt segment with continuous cumulative growth since the Great Recession.
"You can rack up six figures of debt very quickly, and in an area where you might not be able to capture that on the other side as easily as you think," Baylor professor Blaine McCormick said.
So with all of that debt hanging around, what happens to purchasing power for young upwardly mobile people like bank teller Andrea Belger who had to finance two degrees including a masters?
"I have looked into buying a house and they take 1 percent of your student loan debt and they count that basically as a bill that you're going to be required to pay each month," Belger said. "So my debt to income ratio is completely offset by that. I mean there's no way that I could get approved on my own right now."
Over the last 11 years, mortgage and credit card debt actually fell by 1 percent. Auto loan debt in America has grown 52 percent during that time, but according to Bloomberg, growth of student loan debt blows everything away.
Simply put, the money you're making after college isn't going to building equity in your house, for far too many it has to go to student debt.
Baylor graduate Samantha Ealy rolled up her sleeves and got to work, purging $70,000 in debt in less than three years.
"I think sacrifice, it's so important. I sacrificed in the short term so that I could live comfortably in the long term," Ealy said. "And there will always be cars, there will always be a nicer house."
There’s more bad news when it comes to defaulting on student loans. Student loan debt has the highest 90-day and longer delinquency rate of household debt. That translates to 1 in 10 borrowers being in default. Student loan debt is not forgiven in bankruptcy.
We asked Belger if she had a plan for her current debt situation. "No, basically there's a few repayment plans that I've looked at. But for me, just having a baby, diapers alone are almost a student loan payment for a month. I just do the income-based payments and at the rate that I'm paying it now, there's no way I'm going to have it paid off anytime soon. There's just no way to get ahead of it."
McCormick has advice when it comes to working a part-time job and keeping the loan money in check.
"My sense, and I've been in this industry for 25 years now, is that any student can work 10 hours a week while they're in college. Most students can work 20 hours a week, while they're in college." McCormick said. "When you get up to 30 and 40 hours per week at a competitive university, the wheels are going to come off."
If college debt in America keeps increasing, we could be facing an entire generation that is limited in what they can buy, or finance, all due to a large amount of student loan debt accumulated over a short period of time, and how long the debt could remain.
Alternatives to college
McCormick also pointed out that college isn't for everyone and learning a trade is a great choice. If you can make hot air cold, or cold air hot for example, you'll always have a job in Texas. McCormick emphasized scholarships, even if you only get $500 per semester, after four years that's $4,000 in loan debt you wouldn't have.