College debt increasing
Students comprise fastest-growing group in debt
College alumni who owe more than $20,000 in student loans make up the fastest-growing group of indebted "20-something" Americans, according to credit-reporting agency Experian.
Between 2001 and 2006, average student loan debt rose 16 percent to $14,379, according to the Experian report.
Even a full-tuition scholarship doesn't provide immunity from debt, said John Manning, a senior in the College of Arts and Sciences. Manning said he's taken out a $5,000 loan from the government and will also be paying his mother back for money she's given him throughout his time in college.
"$5,000 isn't that bad," Manning said. "I can get that paid back over six months, most likely. I'm paying my mom back later."
While the number of "20-somethings" with debt has declined by about 7 percent since 2001, about two-thirds of Americans in their 20s are still dealing with some kind of debt. The average debt has increased by nearly $1,500 in that same time period, according to the Experian report.
"This debt-for-diploma system is strangling our young people right when they're starting out in life," said Tamara Draut, author of "Strapped: Why America's 20- and 30-Somethings Can't Get Ahead" in an interview with USA Today. "It's creating a sense of futility that no matter what they do, they're not going to be able to get ahead. It's a sense of hopelessness."
Thirty percent of Americans in their 20s said they worry frequently about their debt, and 60 percent said they feel they face greater financial pressures than previous generations, according to a poll by the National Endowment for Financial Education and USA Today.
Many college alumni are exacerbating their debt problems by sinking deeper into credit card debt as they try to pay off their student loans, the Experian report revealed.
"How do I deal with my loan debt? I rack up credit card debt," said AU alumna Sarah Pelletier, who graduated in 2002. "I pay off my loans and then I don't have money for things I need like, you know, food or clothes. So I use the credit card."
College debt has an effect on the career plans and living arrangements of college alumni as well. Twenty-two percent of college students told Experian they took jobs they otherwise wouldn't have taken in order to get more money to pay off debt, 29 percent said they put off or chose not to pursue more education due to the debt they already have and 26 percent said debt has deterred them from buying a house.
Students are also moving back in with their parents after college to save money. Recruiting company Experience Inc. reported that 58 percent of the 320 "20-somethings" it surveyed in July had moved home after college. Thirty-two percent of those stayed at home after college, Experience Inc. reported.
Manning said students need to learn how to manage money correctly in order to avoid debt.
"Be very mindful of how much you eat out or buy alcohol and movie tickets," he said. "If you plan to give yourself an upper limit for 'recreational spending,' then you'll be much better off in the long run. Six-dollar Chipotle is amazingly deceptive"