The Student Loan Debt Crisis
Student Loan Debt Now Over $1.3 Trillion Dollars
This is not a misprint. If you need to see it in whole numbers that would be $1,300,000,000,000, and by the year 2020 the student loan debt is projected to be at $2 Trillion Dollars. Just to put this in perspective, student loans now account for the second highest form of consumer debt behind mortgages. The U.S. government, through banks like Sallie Mae, or since 2010, by the Department of Education, backs the majority of student loans. The creditor in this scenario is the U.S. taxpayer, who if students default on these loans will be subject to carry the burden of these loans.
As far as employment is concerned, 49% of recent college graduates between the ages of 22-27 are not employed full time. One adverse effect of this high unemployment percentage is: on average, more than 3,000 borrowers default on their federal student loans every day or 108,000 a year. No wonder student loan default rates have increased 327% since 2003.
We know 2.03 million job openings requiring a bachelor’s degree go unfilled. Employers are reporting there are not enough skilled workers for them to compete in a global market. According to the National Association of Colleges & Employers, the 62.7% of recent graduates in low wage jobs or not fully employed represents a talent pool of 1.1 million people. Why is it that recent college graduates who can meet many of the needs of the employers are either unemployed or underemployed?
We can all agree colleges and universities do a magnificent job in preparing graduates academically, but based on the feedback from employers, graduates are not “job-ready.” More than half of all companies (60%) said that new graduates lacked critical thinking skills and attention to detail (56%). In addition, 44% of all companies found fault with their writing proficiency and 39% of all companies were critical of their public speaking ability.
Now that we know the problem, how do we fix it? One way to fix the problem is to develop programs that address the concerns of the employers and the weaknesses of the graduates. Over the past couples of years, EDSI has collaborated with the workforce system, universities and employers developing the Courses to Careers Program. What is unique about this program is the college graduates who are unemployed for a minimum of six months and starting to feel the struggle of paying their student loans, attend workshops addressing the concerns of the employers. Once they complete the workshops, they are matched up with employers paying a good wage looking to fill positions through either a paid internship or a direct hire. What is even more important is the graduates are placed with employers requiring the field of study or their major.
We must start to develop more programs to address this debt crisis where we all stand to lose, especially the taxpayers, recent college graduates and the employers.