Median starting salary for college grads now is $27,000, if they can find a job. Only 56% of 2010 grads held at least one job by this spring. Even worse, median salaries are down 10% from 2006-2007, an appalling statistic. Assume a relatively modest $60,000 in student loans, and 25% of gross income for a student making the median salary will go for debt payments.
27,000 = $2250 a month
633 Â Â = monthly payment on $60,000 student loan
2250 (monthly gross income
-337 (15% estimate for federal and state tax)
-633 ( loan payment )
1280 remaining income
Someone making that could not live on their own by themselves and would have to be either living with their parents or in an apartment with several others. (Or say the Hell with it and deal drugs.)
Worse, your debt cannot be discharged in a bankruptcy. A high school graduate who takes on debt like this and gets in trouble can file a Chapter 7 (being well under the median household income) and shed it. You, as a graduate, cannot. You’re stuck with it, and if you lose your job you’re instantly hosed, as that $60,000 will have penalties and interest immediately added to it.
Bank make these loans, which are guaranteed by the federal government and can only be discharged by death. It’s quite a racket, in effect creating indentured servants. All with the happy full approval of the government.
College is frequently a “good investment” when paid for in full at the time you take it (that is, you’re investing time and current income) it almost never is when you have to finance that alleged “education.”