The Crushing Burden of Student Loans:

How Debt Weakens Family Formation among Generation X The Federal Guaranteed Student Loan program represents an almost pure example of the “law of unintended consequences” in public policy. Initiated in the mid-1970s as a modest supplement to means-tested federal (later, Pell) grants, it has grown into a massive program involving a majority of students at both the undergraduate and graduate levels. Supplemental private loans have multiplied the turn toward debt-funded higher education. According to the Nellie Mae Corporation’s most recent National Student Loan Survey, average undergraduate student loan debt in 2002 was $18,900, up 66 percent since 1997 (the median debt figure rose 74 percent from that latter year, to $16,500). Both figures are surely higher today. Students attending graduate schools reported an additional $31,700 in average debt, an increase of 51 percent since 1997. Graduates from professional schools, notably law and medicine, carried an average of $91,000 in accumulated total debt. Overall, an estimated $94.2 billion in federal assistance was given to students in the 2009–10 academic year, up from $40.2 billion in the 1999–2000 academic year.[1] Students graduating from colleges and universities during the last quarter century represent the first generation of Americans to finance a significant portion of their higher education through interest-bearing debt. Indeed, “they may be the most indebted generation of young Americans ever,” with the average indebted adult, ages 25 to 34, spending nearly 25 percent of income on debt service of all types.[2] While referring to a related situation in New Zealand, a student-backed report captures a sentiment also growing in America: The stories [told here] belie the government’s view that student debt will not impede borrowers’ lives. The fact is that ex-students are struggling financially and emotionally because they have mortgaged themselves for an education . . . that has created
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