Chart: Debt vs Wages
This graphic comes from an article published in the Wall Street Journal almost a year ago but only recently came to my attention. In it, author Phil Izzo cheekily “congratulated” the class of 2014 on being the most indebted ever. But as we’ve discussed in regards to tuition growth, bigger debt isn’t necessarily a bigger problem if incomes have risen as well. So… with that in mind how does this growth of debt look now?
Unfortunately for the modern student tuition bills and the debts incurred to cover these costs have risen rapidly while incomes have actually fallen over the course of the past decade. Students today take on 35% more debt, on average, than in 2005 while during that same time period wages have actually fallen 2.2%. I’ve been reading about the student debt crisis for at least that long and it obviously shows no sign of improving.
With the right understanding and tools just about any student can make it out of school debt-free, but it won’t happen overnight nor by accident. If one wants to avoid the fate of the average one needs to bring on all of the tools of affordology: judicious school selection, hard work toward a meaningful degree and experience, shaving costs at every turn, and finding extra income wherever possible. Be sure to read past posts and stay tuned for more on these topics.