The Old Ball and Chain: Millennial Edition
The student debt situation in the United States is a crisis . Like, for real.
- The average debt for students in the class of 2016 was $37,172, up 6% (eek!) from the year before.
- The average monthly student loan payment for borrowers aged 20 to 30 years is $351. (No wonder we have no savings!)
Maybe we should solve this, right? Like, what are some specific things the United States could do about our loan debt short of changing our entire higher education system?
Good question. Let's take a look at what our friends 'Down Under' are doing.
The cost of a college education in Australia is actually comparable to that of the United States, but somehow students there graduate with significantly less debt: $21,000 compared to $37,172. Also, they handle the repayment on that debt very differently.
- In Australia, tuition cost is based on the potential earnings of an area of study. That means bro-y finance people pay more than hippy art therapy people. That makes sense, right?
- Students in the sunburnt country don't pay back anything upfront, and only begin to payback their student loans once they reach a certain income (~$39,152 USD).
- Payments get automatically deducted from their paychecks and they pay no interest.
- There's one repayment plan with one set of instructions that's managed at the national level. (This is a stark contrast to America, in which borrowers have a plethora of options but the result is a hopelessly complicated and difficult to crack system.)
The upside: Most Australian students and their families don't obsess about the cost of college, and that makes college more accessible to everyone.