An indispensable tool in modern life, debt happens for many reasons.
As the economic struggle of the Depression and rationing of World War II fades from the collective consciousness, Americans feel more confident taking on debt and optimistic about their ability to pay it all back and start saving one day in the future.
Robert Manning, Ph.D., author of "Credit Card Nation," studied the financial practices of Americans across generations to discover what influences spending in specific age groups. The research professor and director of the Center for Consumer Financial Services at Rochester Institute of Technology also examined the different attitudes toward debt to find out why people owe so much more today than they did 40 years ago.
"You really can't over-generalize," says Manning. "You have to look at people in particular life cycles to find out why they spent more on those particular items than did a previous generation."
| Experts explain that debt starts from youth and continues on through life, often into those not-so-golden years. |
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College
"Borrowing to pay for college has become the primary way that most students pay for college," says Tamara Draut, director of the Economic Opportunity Program at Demos and author of "Strapped: Why America's 20- and 30-Somethings Can't Get Ahead."
Parents who are unable to save the staggering amount of money needed to fund an undergraduate degree for their kids have a few choices. They can go into debt by getting a PLUS loan or by taking out a second mortgage -- or they can put the burden on their children.
"If you look at the way we used to do it, we had pressures on states to keep tuitions low and affordable for middle-income households, and for lower-income households we had grant aid that covered about three-fourths of the cost of going to college," says Draut.
"Now the majority of aid is debt-based aid and the grants cover about a third of the cost of school."
According to the College Board's "Trends in College Pricing 2007," average tuition costs for the 2007-2008 academic year are $23,712 at a private school and $6,185 for a public school. Add in room and board and the totals come to $32,307 and $13,589, respectively.
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