In news that you knew already but is somehow still news, a new report suggests that–shocker!–student loan debt makes you poor over time. (Especially now.)
But it’s not just immediately being broke or close to it after graduation that will keep you reaching for the ramen noodles. Reports say now that even though a college education is supposed to ensure that you’ll make more dough throughout your life, if you’re in a ton of debt–even if you studied, say, neurosurgery or “how to be Donald Trump”–you’ll accumulate less wealth over time.
And if you’re like me and busted your butt to graduate without any debt, even we’re not off the hook.
Economist Robert Hiltonsmith notes (via CBS News), “Student debt’s financial impact won’t just be felt by the nearly 39 million Americans who currently have student loans. The drag of student loans on indebted households’ purchasing power and ability to save will slow already sluggish growth for the entire U.S. economy.”
Mr. Hiltonsmith’s data also shows that those with student loan debt often earn more early in their careers, but as they progress and advance, their salaries eventually level out with their debt-free counterparts.
What’s even scarier? Mr. Hiltonsmith was being optimistic.
“These projections assume that income and assets grow and debts decline at a steady rate each year, which is in reality a very rosy assumption,” he said. “Most households lose jobs or suffer declines in income, suspend or withdraw savings, and postpone debt payments over the course of a working lifetime. However, in order to both keep the model as simple as possible and give predictions that are in reality a best-case scenario, our model simply assumes that each household’s income grows at a steady, fixed rate each year, that retirement savings grow and accumulate returns at a steady pace.”
How can we deal? At the ballot box, for one. Mr. Hiltonsmith said that a leading cause of the student loan debt crisis is caused by cuts in higher education spending–so research your local congressmen and congresswomen’s records in terms of education funding before November … and get ready to tighten your belts.
That is, if you wear pants.