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Notebook Money


Debtors' prison

A typical college graduate has accumulated a debt load of $28,953, compared to just $20,402 four years ago

Graduating college seniors traditionally wear black at commencement events, but nowadays they are also up to their necks in a different color: red. Nellie Mae, the federally backed student loan agency, reports that this spring's graduates will face a staggering and growing level of personal debt after they have walked across the podium to receive their degrees.

A typical graduate this year has accumulated a debt load of $28,953, compared to $20,402 in 2001. The biggest contributor is debt for student loans, which averages $26,089, but high-interest credit-card debt also chips in $2,864. The burden is so high that Americans between the ages of 18 and 24 now spend one-third of their income on debt payments.

Some economists argue that these numbers actually describe a glass half full: Students may build up a pile of debt to get a college degree, but they usually will then earn much more than Americans without one. The Federal Reserve Bank of Dallas estimates that a person with a bachelor's degree earns $2.56 million on average over a lifetime, compared to $1.45 million for a high-school graduate.

That's more than 75 percent, and more than a million dollars, in increased earning power, making the $28,953 in debt look like a reasonable investment. "When kids say, 'Why should I go to college?' I say, 'Hey, how would you like me to give you a check for a million dollars?'" Arkansas Gov. Mike Huckabee told Arkansas' KATV.

But if college debt is an investment, it may be one with a high social cost. Leaving college with such a high level of debt could be one reason most young Americans put off what have historically been considered the typical marks of adulthood: leaving home, starting a family, and reaching financial independence. Market researcher Twentysomething Inc. says 65 percent of college graduates return home to live with their parents. Meanwhile, the median age of a first marriage was up to 27.1 years for men and 25.3 years for women in 2003, both increases of about four years since 1970.

Sociologists have had to invent new terms for what has become a new normal stage of life between adolescence and adulthood: an "adultescence" age group populated by "kidults," "thresholders," and "boomerang babies."

"I'd encourage parents to get past their old expectations of when kids will become independent," Kansas City mother Pat Stilen told the Knight Ridder news service. "Economic times are such, the rules have to change."

The culture of student debt shows no sign of ending, so young adults and their parents will have to continue to adjust their lifestyles. Or perhaps Americans will start raising a question that surprisingly few ask now: Why, exactly, do colleges and universities need so much more money each year to educate students?