NEW COVER STORY: Student debt is bad, but that's no reason to avoid borrowing (via dianeharris)
Even short of default, these loans can be problematic for parents nearing retirement, a time when income will likely fall and it's important to be debt-free. One-quarter of parent PLUS borrowers are 60 or older, according to the Urban Institute, and nearly half of them have less than $50,000 in savings.
But since a college degree typically leads to better job opportunities and higher pay, borrowing to get a B.A. is an investment that pays off for many and can help with the cost of housing and childcare. The typical graduate of a four-year college earns about 70 percent more than someone with only a high school diploma, while those with advanced degrees make about 120 percent more.
Students who attend for-profit colleges also default on their loans at a much higher-than-average rate: 30 percent of bachelor's degree holders who started at a for-profit college defaulted on their loans within 12 years of starting school vs. 5 percent of B.A.s who began at private nonprofit or public schools, TICAS reports.
Says Scott-Clayton, whose recent research has focused on alarming patterns of student loan default, particularly among African Americans,"What's most shocking is not that these disparities exist but the sheer magnitude of them." New America's Fishman agrees."In America, we think education will solve everything and the sad truth is, it doesn't," she says."Research shows that higher education actually has very little impact on the racial wealth gap because there are so many other economic factors involved, such as labor market discrimination and institutional racism within our economy."
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