America’s $1 trillion student debt problem heads into its sixth year

Student debt has been a $1 trillion problem for at least six years.

Six years ago, on April 25, 2012, activists took to the streets to mark the country’s outstanding student loan debt surpassing $1 trillion. And in the years since, many of the trends that pushed student debt levels to climb have persisted, and in some cases, they’ve gotten worse.

Focusing on the $1 trillion mark is somewhat “arbitrary,” given that it doesn’t change the debt burdens individuals are managing every day, said Mark Huelsman, a senior policy analyst at Demos, a left-leaning think tank. (Outstanding student debt reached $1 trillion during the second quarter of 2012, according to the Federal Reserve, which includes April.)

Still, Huelsman said these kinds of “big round numbers” can help galvanize people around the issue. “Rising student debt has really happened over a 20-year period,” he said.

A variety of trends are fueling that growth. At the same time that the cost of college has climbed — caused in part by state disinvestment in public higher education — a college degree has become more necessary to earn a decent living. That means that as more people are attending college, they’re increasingly relying on debt to finance their schooling, pushing the level of overall student debt up.

Sluggish wage growth and the rising cost of other necessities, such as child care, also mean that families have less money to rely on to pay for school. And once students leave college, those stagnant wages can make it difficult for them to pay down their debt effectively.

“There are broader issues in the economy that show up in the student debt figures,” Huelsman said. “But it’s also a set of deliberate policy choices that we’ve made at the federal or state level to not meet the rising demand with the investment that previous generations have received.”

There are indicators that if student debt continues to climb, it could have a major impact on the economy. For many borrowers — particularly those who graduate from a decent college — student loans are a manageable investment in their education. Still, levels of student loan delinquency remain persistently high.

That gives cause for concern, particularly given that federal student loans offer so many options for borrowers to stay current, Huelsman said. Borrower advocates have said high levels of student loan delinquency and default point to student loan companies hired by the government not doing enough to work in borrowers’ best interest.

“I often hear that the big numbers are not necessarily what we should worry about with regard to student debt, but at some point it has to matter,” Huelsman said.

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