Using the Education of Engineering Economy to Impact the Reduction of Engineering Student Loan Debt

摘要

The U.S. student debt crisis has become an epidemic over the last two decades. Unfortunately, the epidemic is expanding into the Engineering fields where debt has been traditionally minimized by such pursuits as internships, co-ops, and research projects that were supported by scholarships, fellowship funds, and teaching assistantships. Engineering students expect to make higher incomes than many other majors. That increase in expected earning power may cause students to take out higher loans than they otherwise would have. MK Consulting defines a 10% rule, that the amount of income that is typically needed for paying off this debt within 10 years has been around 10% of the borrowers' income. Anything above this 10% is defined as excessive debt. Assuming an average debt of $50,000 at an interest rate of 4% for 10 years, these students would need to make payments of $5,110 per year ($425 per month). Following the 10% rule they would need to make an annual income of $51,100. 2008 data from MK Consulting shows that approximately 16.3% of engineering majors graduated with excess debt compared to theology (64.7%), agriculture (34.1%), education (33.9%), and humanities (33.5%) and that these numbers grow each year. This does not include the students who drop out of school and carry debt with them, though they did not earn their degree. Many feel that this excessive borrowing is due to the student's lack of understanding of debt.