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Forever in Student Debt?

By Mia Taylor

SAN DIEGO (MainStreet)--Massive student loan debt is having a profound impact on twenty- and thirty-somethings, including delaying the ability among both generations to build any wealth and causing anxiety among borrowers of all income levels about whether the loans can be repaid.

"Concern about the ability to repay student debt is pervasive, and this early debt can have rippling effects over a life course, " says Signe-Mary McKernan, one of two authors of a new report from the Urban Institute called "Forever in Your Debt: Who has Student Loan Debt, and Who's Worried?"

"This is a tipping point moment," McKernan says. "People under 40 may end up so far behind, that it may be impossible to catch up."

In 1989, student loans were a relatively small component of the debt held by 29- to 37-year-olds. But by 2010, student loans were second only to mortgage debt, according to the new report.

The report also notes that one in five adults age 20 and older have student loan debt, and more than half of them worry they may be unable to repay their obligations.

Outstanding student loan balances in the United States total roughly $1 trillion. On average, recent college graduates owe about $27,000, the report states.

And the profile of the typical debt holder is anything but typical. It's a varied group that includes young and old, white and non-white, men and women, low-income and high-income, according to the report.

The drastic change in student debt levels between 1989 and 2010 can be attributed to several factors, McKernan says.

"Tuition is increasing over this time period, and more people are going to school and getting higher degrees," McKernan explains. "The other thing is, those going to school are taking on a greater amount of debt."

Another large part of the problem is people not finishing their degrees, McKernan says.

"People take student loans to get a bachelor's degree and then don't complete that degree," she says. "They don't earn the credential. And that number goes up for African Americans and Hispanics. The degree is going to pay off, on average, if you can complete it."

Meanwhile, income level appears to provide little relief from enormous school debt and the associated anxiety being felt by Generation X and Generation Y.