There has been a lot of talk about the high cost of student loans that now face many college graduates, but little attention has been paid to exactly how those outstanding debts can effect more than just the borrowers themselves.
Many Americans across the country may be carrying significant student loan debts into their middle-aged years, meaning that these burdensome balances, which can still total tens of thousands of dollars, may be having a significant negative impact on their children as well, according to a report from McClatchy Newspapers. This problem might only be exacerbated by those in Generation X who are now sending their kids off to college as well.
Today, the average annual cost of living on campus and paying tuition is more than $25,000 at public colleges and $50,000 at private institutions, the report said. As such, it can be relatively easy for young adults to rack up more than $100,000 in student loan balances, especially if their parents are not able to help them pay for the education themselves because of the constraints they face due to their own debt obligations.
That, in turn, will likely lead to financial difficulties for those who graduate from college in the next few years, and those who have done so in the past several years as well, the report said. A recent poll by the Washington, D.C., nonprofit Generation Opportunity found that the unemployment rate for those between 18 and 29 was twice that of the rest of the population, and the highest it has been since the end of World War II. Further, more than 75 percent believe that the current economy will affect major life decisions. In all, 44 percent believe they will have to delay a home purchase because of the economy, and more than 25 percent said it would affect their ability to repay student loan and other debts.
In the past, many parents may have helped their kids pay for school, which was easier then because tuitions were significantly lower than they are now, or will be in the future. However, other studies have shown that even people in their 50s and 60s still owe sizable student loans debts they have yet to pay back, which may make them less capable of handling other financial efforts.
Image: j.o.h.n. walker, via Flickr