A recent survey sponsored by the global nonprofit youth education organization Junior Achievement and the New York City-based finical services company Voya Foundation has found that more than 33 percent of teens don’t understand their responsibility for paying off student debt, which has become a national issue as student debt levels soar and repayment rates plummet.
According to data compiled by both organizations, the average debt load has soared to nearly $35,000 from only about $10,000 in the mid-1990s. During the same period, the proportion of students graduating with student loan debt has increased from approximately half to 70 percent.
Outstanding student debt was estimated at $1.3 trillion in 2015, according to the Federal Reserve.
While more students are taking on higher loan amounts, the pace at which they are repaying those loans is slowing.
According to the U.S. Department of Education, as of the end of August 2015, about 7 million Americans with student loans have not made a payment to the government in a year or more. This is an increase of 6 percent, or 400,000 borrowers from 2014.
Junior Achievement and Voya state that credible estimates suggest that 25 to 30 percent of all loans outstanding, ignoring those held by students still in school, may be delinquent — meaning payments have not been received for 90 days or more — or in formal default — meaning payments have not been received for 270 days or more.
“These are staggering figures, much worse than the situation 5 to 10 years earlier,” according to Junior Achievement’s 2015 Understanding the Student Loan Explosion report.
As part of Junior Achievement’s mission to educate students in financial literacy, entrepreneurship and workforce readiness, the organization recently participated in a week of financial education classes for the more than 7,400 students across the Stratford public school system in partnership with business professionals from organizations such as Wells Fargo, JPMorgan Chase, FedEx and Ansonia-headquartered Better Packages.
“These types of lessons, not typically included in school curriculum, help young people understand credit and loans and how to make decisions about debt, such as student loans, which are imminent for many of them,” said Bernadine Venditto, president of Junior Achievement of Western CT. “College education is the second-largest investment many people will make in their lifetimes, and yet decisions to take on student debt are made by 17- and 18-year-olds who have received little to no financial literacy education.”