9 Surprising Facts About Student Debt

iStock
iStock

Americans’ accumulated student debt has topped $1.4 trillion, an all-time high. While that debt came in the service of providing valuable education, it can be a formidable hurdle for individual workers to overcome as they transition from student life into their careers. Check out nine surprising facts about the past, present, and future of the academic loan industry.

1. SCHOOL WASN’T ALWAYS SO EXPENSIVE.

After World War II ended with an Allied victory, the U.S. government rewarded those who served with scholarships under the GI Bill. Millions of veterans got a free education, while millions more who didn’t serve could attend for extremely low tuition rates that could be covered by working a summer job. This kind of nearly unrestricted access continued for decades until the economy took a downturn in the 1970s. As oil embargoes and inflation led to a sharp increase in tuition, private lenders started to take the place of federal aid, and the debt boom began.

2. DEBT HAS SURGED 58 PERCENT IN THE PAST 10 YEARS.

It’s easy to blame inflation for the ballooning student debt balances of the past decade. Graduates in 2005 owed an average of $17,233, while those exiting school in 2012 owed an average of $27,253. But average debts in the auto and credit card industries have fallen in the same period. The difference? Economists believe students have become more likely to take on higher loan amounts in the belief they’ll be able to secure higher-paying jobs after graduation. Unfortunately, those jobs can fail to materialize, leading to growing amounts of debt.

3. …BUT MOST DEFAULTS ARE ON LOANS LESS THAN $10,000.

Economists say that it’s a misconception that enlarged debt amounts are responsible for many of the defaults. By some estimates, two-thirds of delinquent loans are for $10,000 or less. Surprisingly, totals of less than $5,000 make it eight times more likely a student will default than if they owed a greater amount. One possible explanation: These smaller debts belong to low-income employees who didn’t finish school. For workers in lower income brackets, these smaller debts can still be significant obstacles.

4. YOU CAN LOSE YOUR DRIVER’S LICENSE FOR NON-PAYMENT.

What could a student loan default have to do with your driver’s license? In some states, a lot. Residents of Montana and Iowa reported to have non-payment of loans can see their licenses revoked. Other states, like Tennessee, can also suspend professional licenses. In 2010, 42 nurses had to stop working when their loans became past due.

5. DELINQUENT? YOUR WAGES CAN BE GARNISHED.

It’s a vicious cycle for graduates trying to climb the career ladder. If an entry-level job isn’t paying enough to cover student debt, the lender—often backed by federal government protection—can garnish already thin wages in an attempt to recoup their money.

6. DEBT CAN AFFECT YOUR LOVE LIFE.

One prominent economist has tracked survey data that examined the correlation between student debt and lifestyle choices like marriage. For every $10,000 owed, the likelihood of getting married within seven years of graduation fell by 3 to 4 percent.

7. SOME EMPLOYERS WILL HELP EASE YOUR DEBT BURDEN.

Given the prevalence (and amount) of student debt today, some companies hoping to attract top talent are including loan repayment in their benefits packages. Before you sign up for the assistance, know that there will likely be a cap on how much you’re entitled to annually. Another factor to consider: The money your employer puts toward your student loan is counted as taxable income, which means the benefit could end up being a burden once tax time rolls around.

8. YOUR STUDENT LOAN INTEREST PAYMENTS MAY BE TAX DEDUCTIBLE.

If you make less than $80,000—or $160,000, if you’re filing jointly with a spouse—you can claim any interest payments you make on your student loans as a deduction. (According to the IRS’s website, you can claim this deduction even if you don’t itemize everything you’re claiming.) By claiming your interest payments, you may be able to decrease your amount of taxable income by up to $2500.

9. THE GOVERNMENT MAY OFFER SOME SUPPORT TOO.

In an attempt to help recent graduates avoid default, the federal government offers programs aimed at reducing monthly loan payments. One, known as the IBR (income-based repayment) program, will ensure payments comprise no more than 15 percent of an individual’s income. (It will also forgive any balances that exist after 25 years.) Surprisingly, only 14 percent of people with federal student loans take part in this and other programs. If you’re struggling with your payments every month, don’t despair: See if you qualify for an income-based repayment plan.

8 Great Gifts for People Who Work From Home

World Market/Amazon
World Market/Amazon

A growing share of Americans work from home, and while that might seem blissful to some, it's not always easy to live, eat, and work in the same space. So, if you have co-workers and friends who are living the WFH lifestyle, here are some products that will make their life away from their cubicle a little easier.

1. Folding Book Stand; $7

Hatisan / Amazon

Useful for anyone who works with books or documents, this thick wire frame is strong enough for heavier textbooks or tablets. Best of all, it folds down flat, so they can slip it into their backpack or laptop case and take it out at the library or wherever they need it. The stand does double-duty in the kitchen as a cookbook holder, too.

Buy It: Amazon

2. Duraflame Electric Fireplace; $179

Duraflame / Amazon

Nothing says cozy like a fireplace, but not everyone is so blessed—or has the energy to keep a fire going during the work day. This Duraflame electric fireplace can help keep a workspace warm by providing up to 1000 square feet of comfortable heat, and has adjustable brightness and speed settings. They can even operate it without heat if they just crave the ambiance of an old-school gentleman's study (leather-top desk and shelves full of arcane books cost extra).

Buy It: Amazon

3. World Explorer Coffee Sampler; $32

UncommonGoods

Making sure they've got enough coffee to match their workload is a must, and if they're willing to experiment with their java a bit, the World Explorer’s Coffee Sampler allows them to make up to 32 cups using beans from all over the world. Inside the box are four bags with four different flavor profiles, like balanced, a light-medium roast with fruity notes; bold, a medium-dark roast with notes of cocoa; classic, which has notes of nuts; and fruity, coming in with notes of floral.

Buy it: UncommonGoods

4. Lavender and Lemon Beeswax Candle; $20

Amazon

People who work at home all day, especially in a smaller space, often struggle to "turn off" at the end of the day. One way to unwind and signal that work is done is to light a candle. Burning beeswax candles helps clean the air, and essential oils are a better health bet than artificial fragrances. Lavender is especially relaxing. (Just use caution around essential-oil-scented products and pets.)

Buy It: Amazon

5. HÄNS Swipe-Clean; $15

HÄNS / Amazon

If they're carting their laptop and phone from the coffee shop to meetings to the co-working space, the gadgets are going to get gross—fast. HÄNS Swipe is a dual-sided device that cleans on one side and polishes on the other, and it's a great solution for keeping germs at bay. It's also nicely portable, since there's nothing to spill. Plus, it's refillable, and the polishing cloth is washable and re-wrappable, making it a much more sustainable solution than individually wrapped wipes.

Buy It: Amazon

6. Laptop Side Table; $100

World Market

Sometimes they don't want to be stuck at a desk all day long. This industrial-chic side table can act as a laptop table, too, with room for a computer, coffee, notes, and more. It also works as a TV table—not that they would ever watch TV during work hours.

Buy It: World Market

7. Moleskine Classic Notebook; $17

Moleskin / Amazon

Plenty of people who work from home (well, plenty of people in general) find paper journals and planners essential, whether they're used for bullet journaling, time-blocking, or just writing good old-fashioned to-do lists. However they organize their lives, there's a journal out there that's perfect, but for starters it's hard to top a good Moleskin. These are available dotted (the bullet journal fave), plain, ruled, or squared, and in a variety of colors. (They can find other supply ideas for bullet journaling here.)

Buy It: Amazon

8. Nexstand Laptop Stand; $39

Nexstand / Amazon

For the person who works from home and is on the taller side, this portable laptop stand is a back-saver. It folds down flat so it can be tossed into the bag and taken to the coffee shop or co-working spot, where it often generates an admiring comment or three. It works best alongside a portable external keyboard and mouse.

Buy It: Amazon

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Here's How Much Money You Need to Earn in Each State to Afford a Home

The keys to your own kingdom.
The keys to your own kingdom.
PhotoMIX Company, Pexels

By this point, it’s well-known that American Millennials are much slower to buy homes than Baby Boomers were at their ages. While certain cultural changes have contributed to this trend—people are waiting longer to get married and have children, for example—the most common reasons to continue renting ad infinitum are financial. In other words, it’s especially hard to afford a house these days. That said, residents of some states have it easier than others.

According to a study by The Cost Guys, West Virginians only need to make $26,393 a year to become homeowners—the lowest of any U.S. state. In general, Appalachia, the Midwest, and the South are good places to live if you have your heart set on pocketing keys to your own tiny kingdom; in Alabama, Arkansas, Kentucky, Mississippi, and Oklahoma, you can feasibly afford a home on an annual salary below $40,000.

The West is expensive.The Cost Guys

If you live in Hawaii, on the other hand, you might end up renting for the long run; that is, unless you earn $152,676 per year (or more). Parts of the continental U.S. put up similarly high stats: Californians need to earn at least $136,600 to set up shop, and inhabitants of Colorado, Washington, New Jersey, Massachusetts, and Washington, D.C. all need more than $100,000.

To come up with these figures, The Cost Guys worked off the widespread assumption that about 30 percent of your annual earnings will go toward your home—which includes mortgage, insurance, property tax, and down payment—and used median real estate values from Zillow to calculate how much that percentage would amount to.

If you’re feeling discouraged by the high price tags on homeownership, it’s worth noting that there’s plenty of room for variation. Maybe you find a home listed for much less than your state’s median value, or maybe you can negotiate a deal for a much smaller down payment than 10 percent (which is what The Cost Guys used for their analysis). There’s also the possibility that you’re able to budget a little more than 30 percent of your income toward housing costs.

You can explore more detailed info and data here.