As colleges across America prepare to award degrees in the coming weeks, commencement speakers can find much to celebrate about the class of 2014. According to the Department of Education, current graduates are part of the largest, most diverse cohort of collegians in American history.
That’s the good news. The bad? They’re also the most indebted.
Student marketing company Edvisors calculates that the average student in the class of 2014 is expected to graduate with nearly $33,000 in debt, with nearly 60 percent of all college students having taken out a student loan. And because the debt burden has risen significantly faster than inflation, up a whopping 361.3% since 2003 according to the New York Federal Reserve, the total pile of student debt in the United States now sits at almost $1.2 trillion dollars.
So how much is $1.2 trillion actually worth? It’s more than twice the size of the projected federal budget deficit for this year. It’s also about the size of the entire economies of countries like South Korea or Mexico. In fact, if Americans students could have used their education loans as purchasing power, these expenditures would amount to the world’s 15th largest economy.
Perhaps realizing the burden that student debt will have on a generation with steadily increasing political clout, Senate Democrats, led by Sen. Elizabeth Warren, propose lowering interest rates on student loans to below four percent, paid for by a “Buffett Rule” tax of 30 percent on millionaires. It’s part of the Democrats’ “Fair Shot” agenda in the run-up to the 2014 elections, and is expected to be put to a vote in early June.
With Republicans protesting the tax increases that come with the bill, however, its passage is far from guaranteed. But with student loan debt rising at a whopping rate of $2,853.88 per second, the total outstanding pile is projected to reach nearly $2 trillion by 2025 (according to progressive think tank Demos), ensuring that the issue will be a focus of policymakers for some time to come.