The student loan industry is starting to get out of control. If a vulnerable uneducated (ironic on purpose here) student decides that they want to go to a private school right out of high school, they have a hefty amount of fees coming their way. If tuition is $40,000 a year (not uncommon at schools like USC, Pepperdine, Stanford, Ivy League etc…) a student who graduates in four years will pay up to $160,000. This does not include living expenses! Which in a city like Los Angeles or Palo Alto is not particularly cheap.

According to Stanford’s own website, annual estimated living expenses are $34,876. Granted this is an extreme example and many students are given aid at private schools but nevertheless the numbers are staggering in terms of total cost.

Continuing to use Stanford, the average undergrad pays $42,690.

So here’s the equation –

4 years of tuition at $42,690 = $170,760

4 years of living at $34,876 = $139,504

Total Expenses of Education = $310,264

But what if this is paid for on loans!

- Loan Balance – 310264
- Interest Rate – 6.8%
- Loan Fees – 0.0%
- Loan Term (Years) – 10 years
- Minimum Payment – $50
- Total Years in College – 4 years

So what does the math come out to on a loan of this rate?

- Average debt per year – $77,566
- Total interest – $118,199.32
**Total cumulative payments**– $428,000.32**Monthly loan payment**– $3,570.53

Total payments are close to a half million dollars. There is no way that the average graduate, even from a great university, could pay off $428,000. This is causing serious economic damage to young adults in our country. Although, this is an extreme example, The average borrower comes out with $26,600 in debt.

This comes on recent news that student loan debt has passed 1 trillion dollars. On a macro economic scale that is a lot of debt. Whether this amount of debt will have any substantial impact on the economy remains to be seen but such insane numbers make a small installment loan look not so bad.