Nationwide, student loan debt was well over $1 trillion in 2013, surpassing for the first time ever the amount of outstanding credit card debt in the U.S.
In Ohio, about 65 percent of students graduating with bachelor’s degrees from state colleges in 2013 averaged just over $28,000 in outstanding student loans, according to a recent report from the Ohio Department of Higher Education’s Affordability and Efficiency task force, which found Ohio’s average student loan debt to be about $3,000 higher than the national average.
“I’m basically working to pay the rent. Everything else is for student loans,” said Kevin Ratliff, 20, who graduated in the spring from the School of Advertising Art in Dayton with about $20,000 in student loans.
Ratliff, who shares an 800-square-foot apartment in Kettering with his girlfriend, Kelli, hopes to eventually land a job as an advertising designer. In the meantime, he’s working behind the desk at Nucleus Coshare in the downtown business district and also as a delivery driver for a Jimmy John’s restaurant.
He said he’d like to start a family and buy a house, but he’s just not bringing in the income yet to service his loans and also afford the items traditionally associated with previous generations’ transition into adulthood.
“My goal is for us to be able to rent a small house sometime next year, but we’ll see when the time comes,” said Ratliff, who worked several part-time jobs while attending school, but still had to rely almost exclusively on loans to pay his tuition. “Right now, we can’t even think about buying a house.”
Lindsey Carfagna, 30, next year will begin paying off student loans for her master’s degree in social science from the University of Chicago, and eventually she’ll have to start repaying the loans for her doctorate degree from Boston College, which she’s finishing up online.
Carfagna recently moved to the Dayton area with her wife, who is a member of the U.S. Air Force stationed at Wright-Patterson Air Force Base. She helps pay the bills with the remainder of the academic grant money she received for her doctoral studies and by working as a personal trainer.
But purchasing big-ticket items simply won’t be in the household budget until she finishes her degree and finds a job, said Carfagna, a former Division I soccer player at the University of Vermont, where she received a full-ride athletic scholarship to earn her bachelor’s before pursing more advanced degrees.
“I’m one of the most privileged people when it comes to getting grant money, but the amount of student loans I owe is still daunting,” she said. “I think I owe between $40,000 to $50,000. But I can tell you that in my circle of peers, that’s nothing.”
Such enormous debt loads have become a real drag on the economy, according to Bill Even, an economics professor at Miami University.
“College tuition costs are rising faster than prices, and student debt is rising faster than the rate of inflation because of that,” Even said. “If students have a lot more student debt when they graduate then that’s going to reduce their ability to go out and get a loan to purchase a house or get a loan to buy a car.”
A recent survey by Bankrate.com found student debt was the main reason that 56 percent of people aged 18 to 29 put off major purchases — the type of consumer spending that makes up more than 70 percent of the economy and usually drives growth during economic recoveries.
In addition, student debt could have long-term consequences for economy beyond the Millennial generation, according to experts, who note that as long as Millennials are stuck paying back their own loans, they will be unable to save for their children’s education, forcing their sons and daughters to take out loans and graduate with even more debt.
The situation has sparked a national debate over how to help indebted students.
The Obama administration has proposed limiting loan repayments to no more than 10 percent of income, down from 15 percent under current law, and forgiving any remaining debt for student loans more than 20 years old.
But such reforms carry their own consequences for the economy, Even said: “It would be nice if everyone could graduate from college without any debt, but then we have to ask what is the alternative.”
Even noted that some proposals could ultimately increase taxes to pay for college, which would also hurt consumption, or reduce tuition costs, which could compromise the quality of education and, therefore, economic productivity.
“If (graduating students) didn’t have debt, they’d be spending more, consumption would be higher, and the economy would do better,” Even said. “But then the question is how are we going to pay for college, and what are the consequences of the methods that we use to erase student debt.”
Like many of her contemporaries, Lauren White, who earned a bachelor’s degree in marketing from Northern Kentucky University in 2011, has begun to question the true value of a college degree.
While the 27-year-old Dayton resident is part of a generation on track to become the most educated generation to date, high unemployment for people in her age group has left many of her friends sitting on the sidelines with advanced degrees but no solid job prospects.
And while college graduates still out-earn people without degrees, White said she’s knows several people who are earning decent salaries working in jobs that don’t necessarily require four-year degrees.
“I understand the purpose of student loans, and I’m glad I got my education,” said White, who still owes $15,000 in student loans. “but I see people making a really good living without a degree. In hindsight, I wish I had been proactive and explored other options.”
White said she was unsure about the advice she would give her children about going to school and taking out what she calls “stupid loans.”
“The way I was raised, it was just like you’re going to college whether you can afford it or not,” she said. “I really didn’t think about having to pay back loans while I was attending school. I’d definitely want to make sure my kids understood the benefits and the potential financial consequences.”
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