<p>"It’s no surprise that most college graduates leave with a degree and an excessive amount of student debt. But what was once promoted as a gateway to a better life has left graduates under 40 with lower accumulated wealth and a lower level of satisfaction in their financial situation." ...</p>
<p>And??? Mr Berry, you are the ‘expert’, do you have any suggestions or solutions since you are making a living off all of this? Or are you tossing off this data to make us more eager to buy ‘expert’ advice? Duh!</p>
<p>According to the article the average student debt is $13,000. </p>
<p>That does not sound like an “excessive amount of student debt”.</p>
<p>IIRC, the average debt of graduates (for those who had debt) was around $30k. So they paid down more than half of their college debt. Also remember that between their savings, scholarship and that debt it paid for 4 years of food and rent while at college.</p>
<p>They have other debts including a mortgage, car loans and credit card debt for a total of $137,000. I think it is very misleading to include the mortgage debt in this number unless it is net of the value of the house (e.g. the amount they are underwater). </p>
<p>Maybe that is more the issue than the $13,000 in debt. </p>
<p>Note also that those with student loan debt have presumably not had much time since graduation to pay off the debt or accumulate savings, so it is entirely believable that they have a low net worth.</p>
<p>The issue is not the amount of debt but rather how the people with debt compare with the people without debt. There is a heck of a different in net worth, leading to the conclusion that in the first 15 years of adulthood, college debt has a negative impact on building one’s nest egg including buying a house and saving for retirement, never mind the ability to save for their children’s college funds.</p>
<p>Pretty bad article / bad headline. They had a bunch of statistics, tossed them in the air and came up with some conclusions that had little to do with the facts.</p>
<p>OR the people without college debt had a family support system that contributed to their net worth. There is nothing shocking in these numbers. If you start out with no debt, you accumulate more than if you start out with debt. ON AVERAGE, those with a college degree accumulate more than those without. I could have probably written the article without ever seeing the data.</p>
<p>Actually, the Pew summary/report is pretty good. It also addresses Fluffy’s point that there are other issues in play besides the difference in student debt:</p>
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<p>We need a study to show that the wealthy are ‘different from you and me’? Seriously? </p>
<p>It doesn’t take a rocket scientist to know with certainty that full-payors (top 5% incomes) have more wealth than those that receive fin aid (the other 95%). </p>
<p>Note to self- buying a home without a mortgage will leave me with less debt than buying a home WITH a mortgage. Got it.</p>
<p>To turn the stats sideways - young adults with a college education have 6-7x the wealth accumulation of students without a college degree.</p>
<p>and 63% of adults have no student debt.</p>
<p>D on FA will graduate in June and will stay near college to work–a high rent area. Does not start her job until July but was unable to obtain an apartment for only half of June. She must pay her share of the security deposit and first month’s rent, and then another month’s rent plus all living expenses like utilities before she ever sees a paycheck. She also needs to purchase basic furnishings for the apartment. She is lucky to have a job, but these expenses will put her into additional debt on top of student loans. This is the way life is for kids whose parents are middle middle class or lower class. In contrast, a friend of mine just paid in full in cash for her son’s first apartment in Boston. Obviously, her son will start out financially well ahead of my D. It is what it is, but not going to college won’t make it better either. </p>
<p>GFG- my employer usually offers new grads a sign on bonus specifically to help them bridge the gap between the time they graduate and the date they get their first paycheck. It usually comes with a stipulation that if the employee leaves during the first year, some portion must be repaid (i.e. we do it to help kids out with their cash flow issues, specifically because we know a lot of kids with big loans don’t have mom and dad with deep pockets to pay that security deposit or what-not. It is not meant to entice kids to work for six months and then take the sign-on bonus and head to Turkey for 6 months to see the sights). Since many employers would have paid to move your D (and this employer may well be paying relocation for kids coming outside the Bay area) your D should find a tactful way to ask.</p>
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<p>Actually, it doesn’t address my point.
They merely say “it may be the case” and “other factors” may be at work. Of course, since the study says that student debt is less than 10% of their total debt. Why don’t they get to the bottom of the issues with the total debt???</p>
<p>This is typical sloppy reporting and analysis - no different than the news reports about the (insert big number) $1T in debt and (insert extreme example) student with $250k in debt with a non-marketable degree. From that type of reporting, who would realize that 85% graduate with debt and the average debt it $30k - the price of a well-equipted Camry?</p>
<p>To summarize:<br>
$13k in student loan debt
$137k in total debts</p>
<p>Lazy conclusion? OMG! It is the fault of student debt!!</p>
<p>S got a signing bonus, but his first job was with a very large company. D’s company is small and did not offer a bonus. Given it was her only job offer, beggars can’t be choosers. However, when discussing this with S, he pointed out that he did not actually receive his signing bonus until after a month of work. So while it was certainly very nice, it did not solve the apartment deposit problem for him either. He still had to get the money somehow, but at least he could re-pay quicker.</p>
<p>I think for most working class kids that graduate and get a job it will take years to be net positive in wealth. Your new are–instant negative. Start-up costs for job–apt, moving etc $5-$10K not hard. Most take at least 5 years to get into the black-even with a decent job.</p>
<p>I haven’t read through the full article, but it sounds like they are comparing families who have student debt to ones who do not, some of which have been out of college for ~18 years. This is not a representative sample of all college graduates. 39-years-olds who have entered a lucrative career field and spend responsibly are more likely to have paid off their debt than 39-year-olds who have entered a lower paying field and/or are financially irresponsible, so one would expect a substantial difference in net worth between the two groups that is correlated with the decision to pay off student loans, rather than caused by taking on debt as a student. </p>
<p>My company sends the sign-on bonus via fed-ex upon receipt of a signed offer letter and after we’ve completed a criminal background check-- in order to help kids “set up housekeeping”, pay security deposits, etc. Here’s hoping things work out for your D- I know it’s a lot of money for kids to get established before they begin working.</p>
<p>I’m willing to bet my SIL (in her 60’s) and her H have a net worth of about $8,700 — no student loan debt, either. Student loan debt isn’t the only reason folks have low net worth!</p>