With student loan debt on the rise and college tuition higher than ever, a surprising new study in the Wall Street Journal shows that overall debt is actually falling for young adults.
According to the study, total debt among young adult has dropped to the lowest in 15 years over the past decade. Pew Research indicates that, “A typical young U.S. household— defined as one led by someone under age 35 — had $15,000 in total debt in 2010, down from $18,000 in 2001 and the lowest since 1995.” Furthermore, 56% of young families saw their debt decline or stabilize between 2001-2010.
This data, however, can be misleading. Those young adults with student loan burdens over $100,000 are finding it more difficult to get approved for mortgage loans, therefore it’s not necessarily by choice that they are unable to accumulate more dept. Furthermore, because of rising student debt, those same young adults are putting off marriages and buying households until later, which suggests they are merely delaying the inevitable debt burden.
Another study by the New York Times shows that income is dropping as well. “According to a 2011 Pew report, the median net worth for householders under 35 dropped by 68 percent from 1984 to 2009, to $3,662. Lest you think that’s a mere side effect of the economic downturn, for those over 65, it rose 42 percent to $170,494 (largely because of an overall gain in property values). Hence 1.2 million more 25-to-34-year-olds lived with their parents in 2011 than did four years earlier.”
This is an alarming statistic particularly when coupled with the amount of student debt averaging $23,820, rising 30% in the past five years according to TIME. That adds up to $1 trillion in overall debt. It’s certainly not for lack of work ethic that this debt is adding up. People are logging more hours than ever. Ross Perlin’s book, Intern Nation: How to Earn Nothing and Learn Little in the Brave New Economy, chronicles the phenomenon of the lack of compensation for entry level jobs and the increasing disappearance of entry level jobs all together. One humorous job listing advertised for a position requiring a graduate degree diploma, preferably a Ph.D, for an unpaid position.
Exploiting unpaid labor by using youth is nothing new. While child labor laws have tightened, the unpaid internship is still a fact of life for many college students. Now those unpaid jobs are being extended to post-graduate work. The recession may be over and the Dow booming, but the shift in the job market and the debt burden will take far longer to heal the burden placed on the individual young adult.