The Economic Impact of Student Loan Debt

Does getting ahead set you back? 

For years people have been talking about the potential fallout from high levels of student loan debt.  Many believe the rising tide of indebtedness will cause problems similar to those experienced with the housing crisis, essentially stalling our economy.  Makes sense.  If we are preoccupied with servicing high levels of debt, we’ll have less money to use for other purchases. Now, I’m not talking about the ability to hit the Mall on a Saturday for Retail Therapy. I’m talking about purchasing homes and automobiles.

We’re already seeing the impact of student loan debt.  A recent report by the Federal Reserve shows some younger Americans are shying away from homeownership.  Historically, predominant amounts of young homeowners were those carrying student loan debts; however, that trend has reversed.  In our new economy homeownership is sought by younger Americans free of student loans.  It does not stop there.  These graduates have also shyed away from auto loans. Will this trend continue? Will things get worse?  Probably, unless we develop programs to help graduates find a proactive approach to loan repayment.  

To learn more, I encourage you to read Student loan borrowers shy away from buying new homes for additional insight into the student loan crisis.

Until next time I’m Thom Fox for Cambridge Credit Counseling Corp. 

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