Are today’s college students setting themselves up to be the debt consolidation customers of tomorrow? A new report from credit bureau Equifax, reported exclusively to the Reuters news service, seems to indicate this. According to the Equifax study, student loans outstanding are up nearly 50 percent since 2007. The amount of money that students have borrowed since that year totals $562 billion. The Reuters story quotes Dann Adams, president of Equifax’s U.S. Consumer Information Solutions division, who says that these numbers mean that this generation of students will struggle to buy their first homes, and maybe even their first cars, because of the overwhelming amount of student-loan debt that they will face.
In the last year alone, college students have taken out $55 billion in student loans, Adams is quoted as saying. These numbers are especially unsettling when you consider that other consumers are actually cutting back on their debt. According to the Reuters story, total consumer debt has fallen by $590 billion – a very solid 5.1 percent – since its peak in October of 2008. Consumer debt now stands at $11 trillion. That’s a lot of money, of course, but at least it’s a figure that, unlike student loan debt, is falling. The Reuters story says that lenders are extending less credit to consumers today, and that borrowers are asking for less. For example, the number of new credit cards issued by banks is down by more than half since 2007, from 69.6 million to 32 million, Equifax reported.
Future Debt Consolidation Customers?
Will today’s college students, then, become tomorrow’s debt consolidation customers? Maybe. It all depends on what kind of jobs these students nab when they graduate. If college students graduate with tens of thousands of dollars of debt, and they can only land a low-paying job, they may soon find their monthly debt obligations piling up, especially when they begin making car and rent payments. They may find themselves with little choice but to take out a debt consolidation loan to get this debt under control.
A Bad Start
It’s unfortunate that higher education has become so costly. It puts graduates at a serious disadvantage just when they’re beginning their true adult lives, and leaves them with a future of debt consolidation and high credit card bills. The latest numbers from Equifax suggest that something needs to be done about the escalating costs of a college education. Whatever fix there is, won’t be easy. But fixing college funding is certainly a task that our legislators need to take on. Or are we comfortable with a future in which all our 20-somethings are broke?