The skyrocketing cost of tuition has not only resulted in a student debt bubble that is approaching $1.5 trillion, but it is also causing American college students to spend more time working paid jobs then they do studying, in class, or at the library. A new HSBC survey revealed that 85% of current college students work paid jobs while they are enrolled. The survey found that they spend an average of 4.2 hours per day working paid jobs: 2 hours more than they spend in class per day, 1.4 hours more than they spend studying at home, and more than double the amount of time they spend in the library.
John Hupalo, an education financial planner told Bloomberg: “The economics of the debt crisis have become a major distraction to students’ education. Students’ first priority should be to get value out of their education, not squeezing out hours at a job in order to make money to sustain that education.”
The survey used data from 1,507 students that were aged 18 to 34 and were currently enrolled in both undergraduate and post-graduate programs. The survey also used data from 10,478 parents who had at least one child that was 23 years old or younger currently enrolled at a University. It was conducted by market research company Ipsos MORI.
The cost per college student in the United States, according to a September report from the Organization for Economic Cooperation and Development, is more than just about every other country in the world. Tuition costs are also at an all-time high, helping usher in the highest rate of student loan debt in history. Student loans are not only now the second largest type of debt for US households, but they have also cumulatively accrued to about $1.5 trillion. Debt loads are often more burdensome for the youngest Americans who are working jobs with minimum wage or entry-level wages. 40% of all millennial debt is student loans.
While in school, students also wind up taking on personal debt. The average student reportedly spends about $4,321 to pay back credit cards and personal loans during the course of earning their degree. According to the HSBC report, this is about $1,000 more than they spend on books.
Students in America are also tasked with funding far more of their expenses than students in other countries. Parents in America spend an average of $17,314 on tuition fees and other bills, but this doesn’t come close to $100,000 that students wind up spending over the course of a earning college degree. The funding gap of about $80,000 is where student loans wind up coming in, and it has been argued that the high cost of college tuition has been a function of the availability of student loans.
But educational planners shift some of that blame to families and students themselves, as well. Hupalo stated, “The fundamental issue is that families and students don’t have a realistic knowledge of the actual cost of an education in advance.”
To make matters worse, the study also showed that only a quarter of parents in the United States have specific education savings or investment accounts that they use to fund their children’s education. The rest rely on their day-to-day income.
And the burden of these financial issues winds up affecting the quality of life for students. 6 in 10 students said that they feel anxious about their finances either “frequently” or “all the time”, according to a report by education technology company Chegg. The same report found that female students were 28% more likely than their male counterparts to be stressed by these financial concerns. It also found that women and minorities disproportionately bear the brunt of student loans, versus men.
Disregarding the skyrocketing costs of education, Hupalo then concluded by stating that more work for students should be considered as the solution: “There’s no silver bullet. Despite these statistics, many students are actually handling these responsibilities well. And for some, taking on a bit more paid work could actually reduce their financial burden.”
Back in August, we reported that one million Americans default on their student loans each year. That means by 2023, approximately 40% of borrowers are expected to default.
That data was according to a report by the Urban Institute, a nonprofit research organization dedicated to developing evidence-based insights on critical socioeconomic issues. Researchers found about 250,000 student loan borrowers see their debts go into default every quarter, and an additional 20,000 to 30,000 borrowers default on their rehabilitated student loans.