PRODUCT PROFILE

Latest Dublin Prices

Cost of US college fees hits poorest

Friday, September 28 09:19:05

Because of the sluggish US economy, fewer college students than before are able to settle into full-time careers immediately upon graduation, contributing to a jump in debt among lower-income households as the young adults take on part-time jobs or attend graduate school, according to Pew. Across all households, the average outstanding college debt increased from $23,349 to $26,682. For the poorest 20 percent of households, the average debt rose from $19,018 to $20,640. Poorer families are less able to deal with this huge level of obligation and unless the students get a well paid job immediately after graduation, the debt piles up and can continue right up to retirement.

As a share of household income, the debt burden was the greatest for the poorest 20 percent of households, or those making less than $21,044. In all, 40 percent of U.S. households headed by someone younger than age 35 owed college debt, the highest share of any age group. "Comparing the debt to their economic resources, the lowest-income fifth of households are the ones experiencing the greatest stresses," said Richard Fry, a senior economist at Pew who analyzed the numbers.

Noting that college enrollment has continued to climb since 2010, Fry added: "Until college enrollment peaks, I would not expect the amount of outstanding student debt to level off." The study released Wednesday is based on the Survey of Consumer Finances, conducted every three years and sponsored by the Federal Reserve. The numbers are as of 2010, the latest available for that survey. Separate Fed data have pointed to subsequent increases in student loans since 2010 that totaled $914 billion in the April-June quarter, but don't provide demographic breakdowns on who shoulders the biggest burdens.

Both President Barack Obama and his Republican challenger in this year's election, Mitt Romney, have been seeking to court young voters with differing visions on how to address rising tuition and growing college debt. Obama wants to make tax credits for college expenses permanent and expand Pell grants for lower-earning families. Romney says that making government the direct source of federal student loans has not worked and simply drives tuition higher. He stresses the need to curb college costs.

The Pew report found that the richest 20 percent of households, or those with annual income of $97,586 or higher, owed the biggest share of outstanding student debt - 31 percent, up from 28 percent in 2007. The poorest 20 percent of households also saw their debt grow, to 13 percent from 11 percent according to a report in The Washington Post. The richest households saw significant increases in per-household debt. For those with annual income of $97,586 to $146,791, college debt rose from $25,921 in 2007 to $31,989. For the richest 10 percent, making at least $146,792, college debt increased from $36,033 to $44,810. Across all households, the average outstanding college debt increased from $23,349 to $26,682. For the poorest 20 percent of households, the average debt rose from $19,018 to $20,640.