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Net Worth Of College Grads With Student Debt Is 20% Less Than High School Grads With No Debt
Zero Hedge ^ | 05/18/2014 | Tyler Durden

Posted on 05/18/2014 4:10:36 PM PDT by SeekAndFind

Yesterday we provided a detailed breakdown of the cost aspects of a college education, particularly for young people who have no choice but to fund their education with student debt, a key part of the equation that the San Fran Fed in its particular cost-benefit "analysis" of college education avoided.

There is much information in the post, but one particular aspect of the Pew analysis that the article was based on, bears repeating and highlighting for all those less than "1%" young Americans debating whether a college education is worth the tens if not hundreds of thousands of dollars in student loans: the median net worth of "young" households, those where the head is younger than 40 years old, is $8,700, or 20% less than not college educated households with no student debt.

Why is this notable? Because as the WSJ reported concurrently, the class of 2014 is the most indebted ever.

"The average Class of 2014 graduate with student-loan debt has to pay back some $33,000, according to an analysis of government data by Mark Kantrowitz, publisher at Edvisors, a group of web sites about planning and paying for college. Even after adjusting for inflation that’s nearly double the amount borrowers had to pay back 20 years ago."

It gets worse: "A little over 70% of this year’s bachelor’s degree recipients are leaving school with student loans, up from less than half of graduates in the Class of 1994."

 

It gets even worse: "From 2005 to 2012, average student loan debt has jumped 35%, adjusting for inflation, while the median salary has actually dropped by 2.2%. If that continues debt burdens could start to become more unwieldy."

Finally, for anyone confused why aside from foreign olligarchs and Wall Street firms buying up high-end and/or distressed real estate, the US housing market will likely never recover, look no further than student debt:

A report this week from the New York Fed looked at how student debt is affecting entry into the housing market. Researchers Meta Brown, Sydnee Caldwell, and Sarah Sutherland found that a smaller proportion of people at age 30 have mortgages that at any time in a decade. But for the first time starting in 2012, having student loans made it less likely that a 30-year-old would have a mortgage.

 

 

Now, 30 still is pretty young and perhaps the student debt is just causing workers to put off home purchases for a little while. Separate research from Richard Fry at the Pew Research Center, looked at the debt burdens and net worth of those with and without student debt. Those data showed that for people under 40, the same proportion of college graduates with and without student debt also had mortgage debt. But those data are a little older — they were collected in 2010 — and they include people with much lower student debt burdens. And they also show that people under 40 with student loans had more other debt — credit cards and auto loans — and a lower net worth than their peers without student debt. As student debt gets heavier, it’s also likely to increase those other burdens, and make it harder to afford a house.

To summarize: More hope for the future than actual change now, more debt; more debt, less net worth; less net worth, less current income; less current income, less investment in the economy and future; less investment in the economy, less actual change and even more hope. Rinse. Repeat.



TOPICS: Business/Economy; Education; Society
KEYWORDS: college; debt; tuition

1 posted on 05/18/2014 4:10:36 PM PDT by SeekAndFind
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To: SeekAndFind

Proof: Arithmetic was never learned by Millennials.

pUblik edumacation dontchaknow...


2 posted on 05/18/2014 4:13:19 PM PDT by freedumb2003 (Fight Tapinophobia in all its forms! Do not submit to arduus privilege.)
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To: SeekAndFind

College has gone past the cost/benefit point.


3 posted on 05/18/2014 4:15:05 PM PDT by MUDDOG
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To: SeekAndFind

So if you’re in debt it effects your net worth?

hmmmm, so unexpected /s


4 posted on 05/18/2014 4:17:53 PM PDT by driftdiver (I could eat it raw, but why do that when I have a fire.)
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To: MUDDOG

“College has gone past the cost/benefit point.”

For certain degrees, it has been WAY past this point for a long time.

50 years+ ago, the following sexist statement WAS TRUE: a lot of women went to college to meet a college boy from a good family. There were throw-away degrees conferred for this purpose. Of course, there is some question as to the cost/benefit of those degrees, in those times. In many cases, it was fabulous!


5 posted on 05/18/2014 4:19:56 PM PDT by The Antiyuppie ("When small men cast long shadows, then it is very late in the day.")
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To: SeekAndFind

The data seems to me to bear out the idea that higher education is an investment - since investments require an initial outlay in expectation that it will bear greater returns down the road.

The operative phrase here is “down the road”. The necessary data regarding the recent glut of student loan debt is not yet available.


6 posted on 05/18/2014 4:25:30 PM PDT by LearsFool ("Thou shouldst not have been old, till thou hadst been wise.")
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To: The Antiyuppie
I bet!

College used to be relatively cheap, but as with healthcare, gov't involvement has caused the cost to skyrocket.

7 posted on 05/18/2014 4:26:23 PM PDT by MUDDOG
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To: The Antiyuppie

How do you justify borrowing for a degree in women’s studies, for example?

The study of women may be fascinating, but, there are no jobs/career paths for which a degree in women’s studies is a qualifier.

It may make sense to borrow some towards a marketable degree. Maybe. Just maybe. But to me, it makes no sense to borrow towards degrees which don’t translate into career paths.

I mean all of this to me it makes no sense, in dollars and cents. You can justify any college courses as broadening your horizons, opening your mind, and all that. Even there, though, we should distinguish among classes in classic literature, history, science, vs. pap such as vaginal monologue study classes.


8 posted on 05/18/2014 4:27:14 PM PDT by Dilbert San Diego
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To: SeekAndFind

A half dozen or so high end private university degrees may be cost effective based upon the contact you’ll make, but almost all private colleges and universities are a waste of money if you aren’t getting ‘free money’ that will bring it down below the cost of a state degree.

For most degrees at most state universities, the same holds true. Many degrees at community colleges may be cost effective.

I’d recommend getting the cheapest undergrad degree possible, and then consider spending money for a few select graduate and professional degrees.


9 posted on 05/18/2014 4:40:02 PM PDT by PAR35
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To: Dilbert San Diego
You can justify any college courses as broadening your horizons, opening your mind, and all that.

Even there, there is a lot free on the internet these days.

women’s studies

That's Womyn's studies. Off to the camps.

10 posted on 05/18/2014 4:42:59 PM PDT by PAR35
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To: PAR35

I’m off to re-education camp.

I also need to sign up for the gay awareness camp, because I was frustrated about Michael Sam kissing his boyfriend so deeply and publicly. Liberals have told us we need to be tolerant about that too.

There are so many things we have to be aware of, to be good liberals.


11 posted on 05/18/2014 4:45:00 PM PDT by Dilbert San Diego
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To: SeekAndFind

Big deal. In the long run those loans will be paid off......the college graduates will have higher money for retirement and social security. What a horrible way to bash a college education. We are setting up our next generation for failure. Work for the degree while going, get a loan and pay it off as soon as you can....those are the opinions we should be giving. Not hey kid just finish high school and you will be better off.....how ridiculous.


12 posted on 05/18/2014 4:47:09 PM PDT by napscoordinator (Governor Scott Walker 2016 for the future of the country!)
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To: MUDDOG
College has gone past the cost/benefit point.

Only if your Major is ____________ Studies.

13 posted on 05/18/2014 4:48:36 PM PDT by dfwgator
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To: MUDDOG

I can’t believe the even conservatives are crying about this. You do know that Democrats want free college degrees for all. Is this what conservatives want? Keep doing stories like this and we are going to have our taxes paying for college for all students. We are playing in the Democrats’ hands.

By the way, Hi Muddog!!!!


14 posted on 05/18/2014 4:49:11 PM PDT by napscoordinator (Governor Scott Walker 2016 for the future of the country!)
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To: dfwgator

It might work if you double major in Afro-American studies and football or basketball. Worked for Julius Peppers.


15 posted on 05/18/2014 4:55:48 PM PDT by MUDDOG
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To: Dilbert San Diego

Yes, I’ve had to lecture co-workers about unconscious bias. They weren’t even aware of it. You seem to have some self awareness, so you may be able to get off with a self-denunciation session as popularized during the Cultural Revolution.


16 posted on 05/18/2014 4:58:21 PM PDT by PAR35
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To: napscoordinator
Back at ya!

The more gov't gets involved to make things "affordable," the more unaffordable it gets.

If I hadn't been there myself, I'd find it hard to believe how cheap healthcare and college used to be. Before gov't made it affordable.

17 posted on 05/18/2014 5:03:07 PM PDT by MUDDOG
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To: LearsFool

Quit being correct and reasonable. Jump on the college is for chumps bandwagon.

(I am aware far too many get degrees, especially in useless majors.)


18 posted on 05/18/2014 5:03:13 PM PDT by EEGator
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To: MUDDOG

lol. I know. What I find amazing is that the VA deals with a relatively small amount of people and can’t seem to get it right, but Obama and crew think that the ACA is a great program for the entire population. They seriously have mental problems.


19 posted on 05/18/2014 5:05:12 PM PDT by napscoordinator (Governor Scott Walker 2016 for the future of the country!)
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To: EEGator

Haha!

I agree that college is of little benefit to some, the future for many others is in doubt, financial aid has become the new welfare/unemployment, and “the borrower is slave to the lender” (as Solomon put it). But the author of the article has a weak case.


20 posted on 05/18/2014 5:10:12 PM PDT by LearsFool ("Thou shouldst not have been old, till thou hadst been wise.")
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To: freedumb2003
If anyone did a real analysis, they'd realize that a very high percentage of HS (no college) grads do get jobs, and the best of that category have the opportunity to get excellent jobs.

They need to look for things such as (1) does the company promote from within, (2)if the need ever arose, could there be opportunities with the company in other areas (3) what is the salary potential, with experience

Why would a company hire someone with insurmountable debt, when there are responsible HS grads with good HS records, great potential, and no debt?

21 posted on 05/18/2014 5:11:33 PM PDT by grania
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To: napscoordinator
Obama and crew think that the ACA is a great program for the entire population

And not just Obama and crew.

Even a capitalist tool like BusinessWeek ten years ago. They ran a story about how great the VA healthcare was, with modern electronic records, and a good example for the whole healthcare industry.

I got BusinessWeek for a long time, but finally cancelled it. Their track record of predictions was horrible. In 2007, one of their leading columnists wrote a column about how gov't regulation had cured the business cycle -- no more crashes. Then in 2008 until the crash, they kept saying the mortgage bubble wouldn't amount to much. And I think it was the issue right before Lehman Brothers collapsed, they said Lehman Brothers would be OK.

22 posted on 05/18/2014 5:29:53 PM PDT by MUDDOG
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To: napscoordinator
Not hey kid just finish high school and you will be better off.....how ridiculous.

That's not the issue. The real issue is whether the rapidly increasing cost of many college degrees is a worthwhile investment, and consequently whether or not the taxpayers will ultimately end up covering a lot of failed student debt.

In many courses of study it isn't clear that the investment is a good one. That indicates several things. First, the price of whole categories of college degrees has become over inflated. Second, the overall economy sadly does not have a need for many of the skills taught in college. And third that there is significant demand and earnings associated with less glamorous professions.

In one sentence, it may not be worth spending $250,000 so that you can bill $50 per hour as software contractor when you could bill $60 per hour fixing cars with a $100,000 investment.

23 posted on 05/18/2014 5:43:42 PM PDT by freeandfreezing
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To: SeekAndFind

when you borrow money, your net worth goes down

isn’t this obvious?
what’s the big deal?

you decide you want to get an education, it can enhance your life in so many ways....some economic ways (higher earnings capacity if you take majors that give you employable skills, not “community organizing” or “commielesbo studies”)

and an education can enhance your life in non-ecnoomic ways, too.... you may understand more of what’s going on, you might discover tremendously valuable cultural, literary, art, music enjoyments in your future life, and so forth.

it is wonderful that each individual can make this kind of choice for themselves in America.

there’s certainly nothing to complain about here!


24 posted on 05/18/2014 5:48:04 PM PDT by faithhopecharity ((Brilliant, Profound Tag Line Goes Here, just as soon as I can think of one..))
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To: napscoordinator

No, I’m not advocating free college degrees. However we would be lying if we said that the value of a college education has not decreased.


25 posted on 05/18/2014 6:00:25 PM PDT by scrabblehack
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To: SeekAndFind

The only futures that the massive student debt is currently “investing in” is the future pensions of those in academia.


26 posted on 05/18/2014 6:16:17 PM PDT by Wuli
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To: freeandfreezing

The Democrats are LOVING this. This is the first step in making College Education FREE. Why are we falling for this?


27 posted on 05/18/2014 6:23:35 PM PDT by napscoordinator (Governor Scott Walker 2016 for the future of the country!)
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To: Dilbert San Diego

RE: The study of women may be fascinating, but, there are no jobs/career paths for which a degree in women’s studies is a qualifier.

Well, Sandra Fluke went to Cornell and majored in Feminist, Gender & Sexuality Studies. Look where it got her...


28 posted on 05/18/2014 6:30:08 PM PDT by SeekAndFind (If at first you don't succeed, put it out for beta test.)
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To: faithhopecharity
There is plenty to complain about here!

Let's start with in-state tuition rates for illegal aliens.
How do you think that impacts poor and middle class “b+” students who do not qualify for government grants, since they can only afford to attend community college classes on a “pay as you go” situation?
Supply and demand is in play, right?

Demand is artificially increased, and the “supply side” charges higher prices for all.

Higher education is a business, like any other.
It just happens to be partially taxpayer subsidized, and also the willing participant to horrendous political corruption.
One would think with all the technology advances,many basic, on-line college level education courses would be exceedingly cheap and all but freely available to everyone!

Not so.

Students pay the “professional educational guild” much as blue collar workers are forced to pay Union dues, in order to demonstrate their willingness to play by archaic rules that might have mattered 100 years ago, but do not matter now.

Why?
So the current higher education employees can continue to be inefficient and ever more costly?

I am willing for a portion of my taxes to help pay “living wages” for serious scholars to concentrate on an almost unlimited number of fields of intensive study.

It is stupid to have new students pay hundreds or thousands of dollars to become certified in old knowledge.

29 posted on 05/18/2014 6:44:47 PM PDT by sarasmom (Extortion 17. A large number of Navy SEALs died on that mission. Ask why.)
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To: grania

>>Why would a company hire someone with insurmountable debt, when there are responsible HS grads with good HS records, great potential, and no debt?<<

Well, we do need to go a little backwards on your question.

Debt is only an issue when it appears it will be a basis for things like bribes. College debt is ignored when looking at the debt of potential candidates.

As for HS degrees, other than accounting, engineering, the biological sciences, most IT, physics, chemistry, geology, anthropology, archaeology, astronomy, advanced training, and virtually every other professional career, yes you are right, a HS degree is all you need.

The problem is these Millennials who take on debt to get degrees in literature, political science (hah!), womyn’s studies, etc. etc. etc. They are the ones dragging the curve.

But when I did take on student debt, I actually did research (back then we did it in buildings called “libraries” with things called “periodicals” and “books.”

I did the cost/benefit analysis and saw the huge benefit of taking on, and paying off, the debt.


30 posted on 05/18/2014 6:56:02 PM PDT by freedumb2003 (Fight Tapinophobia in all its forms! Do not submit to arduus privilege.)
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To: napscoordinator
Why are we falling for this?

I'm not falling for anything. Enabling an entire generation to go into non-dischargable debt to the government is a bad idea. It enslaves them, or will result in massive losses when many of the former students find that they cannot repay the loans.

Everyone should determine the value of the investment they make in education - for many career areas there are better ways to invest in yourself than going to a typical 4 year liberal arts college.

31 posted on 05/18/2014 7:47:43 PM PDT by freeandfreezing
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College students are also deferred taxpayers.


32 posted on 05/18/2014 10:56:22 PM PDT by Gene Eric (Don't be a statist!)
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To: freedumb2003
I did the cost benefit analysis and saw the benefit of taking on and paying off the debt

In some cases, it is still worth it. In many others, debt for that undergrad degree closes options in the future.

For those fields that need degrees and in which jobs are assured, I could see getting an in-state tuition at a public college or finding a school that will provide scholarships. Another avenue is to take some vocational courses before starting college, so a person can earn money that way. If I were in that position now, I'd be taking some accounting courses and doing tax prep in season.

The important thing you did was a cost-benefit analysis. So many people get those loans with nothing but vague promises about their futures. I have no sympathy for them.

33 posted on 05/19/2014 3:53:14 AM PDT by grania
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To: napscoordinator
Here's the BusinessWeek article on the VA healthcare system which I referred to in Post #22. It's from 2006.

The Best Medical Care in the US.

I'm posting the link because I'm so happy I remembered it basically correctly. I said 10 years ago in Post #22, whereas it was actually 8 years ago. But otherwise, OK.

34 posted on 05/22/2014 9:05:39 AM PDT by MUDDOG
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To: MUDDOG

Reading that makes me very hopeful that the VA can get back to the way it was for the good Vet. I have wonderful care at the Baltimore VA where I go for everything and could easily use Johns Hopkins with Tricare, but the Baltimore VA is so good and has such caring people. I want every VA to run like Baltimore and I hope it does soon.


35 posted on 05/22/2014 9:59:43 AM PDT by napscoordinator (Governor Scott Walker 2016 for the future of the country!)
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To: napscoordinator
That's great news that you're getting good care!

Hopefully the latest scandal will lead to improvements at those hospitals that have fallen short.

36 posted on 05/22/2014 10:15:45 AM PDT by MUDDOG
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To: MUDDOG

I hope so too....I am really surprised most about Arizona because you would think with John McCain there, he would at least visit it every now and again to make sure it is running right. What about the Governor too? She didn’t feel like visiting occasionally?


37 posted on 05/22/2014 10:19:29 AM PDT by napscoordinator (Governor Scott Walker 2016 for the future of the country!)
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To: napscoordinator

You’d think. And it’s not like there were no warning flags.


38 posted on 05/22/2014 10:26:04 AM PDT by MUDDOG
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