College graduates in the U.S. are leaving school with more and more debt, which could potentially harm consumer spending among young adults.
Should the student debt issue hamper spending at retail stores, small- to medium-sized businesses could feel the effects. If it is enough to dampen cash flows, these companies could struggle to obtain a loan from a bank, but inventory financing could still be a viable option.
According to Varsity Tutors, the total annual cost of attending an in-state, public college or university was $22,261 in 2012. Meanwhile, the cost of going to private school hit $43,289 last year.
The most expensive school to attend during the 2012-13 school year was Columbia University, as U.S. News & World Report said tuition and fees totaled $47,426.
To help pay for the increased costs of a higher education, students turned to loans, as $237 billion in financial aid was given out during the 2012-13 academic year, with the average student receiving $13,218.
"Now more than ever, it's crucial that parents and students are aware of the total cost of a degree," said Chuck Cohn, founder and CEO of Varsity Tutors. "As the cost of tuition continues to rise, students need to be vigilant about planning ahead and finding the best options for funding their education, not only to attend college in the first place, but also to graduate with an amount of debt they can manage."
With the cost of attending college increasing every year, consumer spending among young adults could suffer. If this leads to a decline in sales at retailers, these businesses might need financial assistance to replenish inventory and operate at normal levels.
By using current product as collateral, inventory financing allows small- to-medium sized retailers to obtain a revolving line of credit, which can be useful in periods where cash flow might be lagging.