New numbers from the U.S. Education Department show that borrowing is up among college students. According to a new report, students borrowed 25% more in the 2008-2009 academic year than they did during the prior year. That's $75.1 billion as the recession put a quadruple whammy on wanna-be college students.

The Recession Four-Part Punch
First, with almost 10% of Americans unemployed, a large number of parents can no longer afford to help their children with tuition bills. Second, credit is hard to get, so even employed parents can't access as many borrowing opportunities as they once could. (Save thousands of dollars on tuition with these tricks and little-known programs in Pay For College Without Selling A Kidney.)

Third, college endowments have taken a huge hit. Even the much vaunted endowments at Harvard and Yale have taken massive hits as bets on exotic and illiquid investments have gone sour, costing the schools about 30% of their nest eggs.

Fourth, the cost of college continues to rise at an astronomical pace, increasing some 4.3% according to a survey by the National Association of Independent Colleges and Universities, even as the rest of the nation views deflation as a bigger threat than inflation. The downstream impact of debt is teaching new lessons and changing the lives of college grads.

The Credit Band-Aid
Some students are choosing to stay in school longer, which often adds to the debt total. Many students rely on their credit cards to coving living expense, further adding to their debt burdens. By the time their academic careers come to an end, most students are carrying an average debt load of $23,186, which is nearly double the burden students carried just 12 year ago. That's about a $260 payment each month for the next decade.

Keep in mind that many students at private colleges and universities spend that much or more for a single year, and students with extensive post-secondary educations can easily spend in excess of $150,000. (Not all student loans are the same. Know what you're getting into before signing on the dotted line. Don't miss College Loans: Private Vs. Federal.)

To cover the debt, the grads need good-paying jobs, which are currently in short supply. The result is a class of graduates that is too mired in debt to afford homes, cars and other major purchases. That debt burden necessitates lifestyle changes, including renting an apartment instead of buying home, delaying marriage and the start of a family and sometimes even moving back home with mom and dad.

No Free Lunches
When the bills come due after four years of parties and freedom, it's a rude awakening to many kids who had vision of good paying jobs, houses in the suburbs and elaborate vacations. It's a wakeup call and a harsh lesson in reality. Our next generation of budding capitalists is learning that there are no free lunches in a laissez-faire society. (Want to learn more? Check out Paying For College In An Economic Downturn.)

Related Articles
  1. Investing News

    Today's Sell-off: Are We in a Margin Liquidation?

    If we're in market liquidation, is it good news or bad news? That party depends on your timeframe.
  2. Stock Analysis

    Are U.S. Stocks Still the Place To Be in 2016?

    Understand why U.S. stocks are absolutely the place to be in 2016, even though the year has gotten off to an awful start for the market.
  3. Investing News

    U.S. Recession Without a Yield Curve Warning?

    The inverted yield curve has correctly predicted past recessions in the U.S. economy. However, that prediction model may fail in the current scenario.
  4. Investing

    Retirees: 7 Lessons from 2008 for the Next Crisis

    When the last big market crisis hit, many retirees ran to the sidelines. Next time, there are better ways to manage your portfolio.
  5. Economics

    The 2007-08 Financial Crisis In Review

    Subprime lenders began filing for bankruptcy in 2007 -- more than 25 during February and March, alone.
  6. Professionals

    Is A Stockbroker Career For You?

    Becoming a stockbroker requires a broad skill set and the willingness to put in long hours. But the rewards can be enormous.
  7. Economics

    Industries That Thrive On Recession

    Recessions are not equally hard on everyone. In fact, there are some industries that even flourish amid the adversity.
  8. Credit & Loans

    10 Reasons To Use Your Credit Card

    There are several benefits to paying with credit instead of debit, if you use a credit card responsibly.
  9. Credit & Loans

    5 Extreme Ways To Raise Your Credit Score

    Desperate to rebuild your credit score because you can’t obtain a loan with a decent interest rate? Here are some extreme options to try.
  10. Fundamental Analysis

    Is a U.S. Industrial Recession on the Horizon in 2016?

    Find out why the industrial economy may be teetering on an industrial recession and what could prevent it from going over the cliff.
RELATED FAQS
  1. What's the difference between microeconomics and macroeconomics?

    Microeconomics is generally the study of individuals and business decisions, macroeconomics looks at higher up country and ... Read Full Answer >>
  2. How can you pay your Walmart credit card?

    Holders of Walmart credit cards can make payments on their balances due by mail, online or at Walmart and Sam's Club stores. ... Read Full Answer >>
  3. Is Apple Pay safe and free?

    Apple Pay is a mobile payment system created by Apple to reduce the number of times shoppers and buyers have to pay for goods ... Read Full Answer >>
  4. Can you use your Walmart credit card at Sam's Club?

    Consumers can use their Walmart credit cards to shop at Sam's Club. However, they cannot use their Walmart credit cards when ... Read Full Answer >>
  5. How can you cancel your Walmart credit card?

    Walmart offers two types of credit cards: the Walmart MasterCard and the Walmart credit card. How to Close Your Walmart Credit ... Read Full Answer >>
  6. Does the Walmart credit card have an annual fee?

    The Walmart credit card does not charge annual fees to its cardholders. It does, however, have other fees associated with ... Read Full Answer >>
Trading Center