The Value of Student Loans for Students Pursuing Higher Education

Graphic that depicts student loanStudent loans in America have become two and a half times larger than in the past decade. This is according to the Quarterly Report on Household Debt and Credit of the Center for Microeconomic Data.

Findings show that the outstanding student debt at the end of June 2016 reached $1.3 trillion. The historical increase in young adults pursuing college in the US, combined with the rising costs of higher education, has become the driving force behind this significant amount.

The American Bank & Trust states that this phenomenon is actually a good thing. Society can view borrowing money to attain a college degree as an investment rather than a mere obligation. Here’s why it can provide more help later in the student’s life.

Behind the Numbers

About four in ten adults under the age of 30 owe student loan, as stated in a recent survey conducted by the Federal Reserve Board. This covers those with obligations presently in forbearance or deferment, except credit card and home debts used for education.

Meanwhile, undergraduate young adults aged 18–19 share around 53% of the total population with unsettled college loans. Among the older age groups, the case is far less common with only 22% for ages 30–44 and 4% for those 45 and older.

It is important to note that the massive gap in student liabilities with these age differences reflects the ability of the older populace to settle their debts with their established incomes. Nevertheless, studies show that the younger generation is more inclined to take out a loan for their education.

Higher Income Later in Life

Pew Research Center reports that employees with an outstanding loan but at least possess a bachelor’s degree receive a significantly higher income than those who don’t. This shows that investing in a diploma helps; students get ahead in their careers.

The future still looks great for degree holders. Attaining higher education through student loans is still proving to be worthwhile in the long run.