The full burden of college debt is still unrecognized

While only 17% of the U.S. population has earned an undergraduate college degree, education debt is a major economic drag on the country.

Over our lifetime college tuition costs have risen much faster than the rate of a typical salary earner’s income. Government and news media now describe the current cost of college as “out of control”. White House announcements as well as stories in Wall Street Journal and Forbes this week draw attention to the issue. Yet even the current coverage of the problem may still underestimate the total economic impact to middle-income families.

In my own case, my wife and I estimate that we won’t be done paying for college loans until about age 63 by devoting almost all of our available free cash flow – perhaps 8% of our gross income – toward these debts. After that, we’ll have little catch-up time to save for our own retirement. Forced early retirement for either of us would be financially devastating. In the meanwhile, we’ve pretty much had to say goodbye to travelling, vacations and dinners out with friends; the things that used to be the upside of being empty-nesters.

Some people might say that this was our personal choice but that dismissal does not consider that in the case of divorce and second marriages (like ours), these education costs are actually court-ordered debts. New Jersey apparently now recognizes the flaw in this legal logic but it is too late to help us. I suspect our situation is not uncommon for middle-income families that put several children through good schools.