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<H1>Class of 2011, Most Indebted Ever</H1>
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<DIV class=hd><CITE>by Mark Whitehouse<BR>Monday, May 9, 2011</CITE>
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<P><FONT color=#666666>provided by</FONT><BR><A
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<P><STRONG>$22,900:</STRONG> Average student debt of newly minted college
graduates</P>
<P>The Class of 2011 will graduate this spring from America's colleges and
universities with a dubious distinction: the most indebted ever.</P>
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<P>Even as the average U.S. household pares down its debts, the new
degree-holders who represent the country's best hope for future prosperity are
headed in the opposite direction. With tuition rising at an annual rate of about
5% and cash-strapped parents less able to help, the mean student-debt burden at
graduation will reach nearly $18,000 this year, estimates Mark Kantrowitz,
publisher of student-aid websites Fastweb.com and FinAid.org.
Together with loans parents take on to finance their children's college
educations -- loans that the students often pay themselves -- the estimate comes
to about $22,900. That's 8% more than last year and, in inflation-adjusted
terms, 47% more than a decade ago.</P>
<P>[More from WSJ.com: <A
href="http://finance.yahoo.com/college-education/article/112701/”http://online.wsj.com/article/SB10001424052748703992704576307332105245012.html?mod=yahoo_free”"><FONT
color=#0f55c3>The Year's Highest Paid CEOs</FONT></A>]</P>
<P>In the long run, the investment is probably worth it. Education is a much
better reason to borrow money than buying cars or McMansions, and it endows
people with economic advantages that the recession and slow recovery have only
accentuated. As of 2009, the annual pre-tax income of households headed by
people with at least a college degree exceeded that of less-educated households
by 101%, up from 91% in 2006. As of April, the unemployment rate among college
graduates stood at 4.5%, compared to 9.7% for those with only a high-school
diploma and 14.6% for those who never finished high school.</P>
<P>Also, graduating with debt might not be all bad. If one buys the argument --
popular among private-equity investors who buy companies using large amounts of
debt -- that the need to meet regular loan payments helps focus people on
finding ways to make money, then high student-debt levels might help the country
derive more benefit from its best-educated residents (as long as they don't
spend their energy creating financial products that ultimately blow up).</P>
<P>[More from WSJ.com: <A
href="http://finance.yahoo.com/college-education/article/112701/”http://online.wsj.com/article/SB10001424052748703859304576309631151069382.html?mod=yahoo_free”"><FONT
color=#0f55c3>It's Time to be a Grown-Up With Money</FONT></A>]</P>
<P>Still, the growth in student debt marks a shift toward a form of obligation
that can be a lot more onerous than credit cards or home loans. Student debt can
carry interest rates as high as those on subprime mortgages, and it's much
harder to shed in the event of trouble. There's no house to give back to the
bank, and even bankruptcy rarely offers relief. As of December 2010, total
student debt outstanding stood at $530 billion in the U.S., up 29% from December
2007, according to the Federal Reserve Bank of New York. Other types of
household debt shrank 8% over the same period. Given the state of the job
market, many degree-holders will face a long slog to get debt-free: The
Collegiate Employment Research Institute estimates that the average salary for
holders of new bachelor degrees will be $36,866 this year, down from $46,500 in
2009.</P>
<P>[More from WSJ.com: <A
href="http://finance.yahoo.com/college-education/article/112701/”http://online.wsj.com/article/SB10001424052748703859304576309880479336872.html?mod=yahoo_free”"><FONT
color=#0f55c3>Psst! You Want to Duck Jury Duty?</FONT></A>]</P><!-- SpaceID=97702453 loc=FSQR noad -->
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<P>In the near term, the debt burden could weigh on both the housing market and
the broader economy. College graduates struggling to pay off debts are more
likely to put off major milestones such as leaving home, getting married and
buying a house, at a time when the creation of new households in the U.S.
remains well below its long-term
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