Student Loan Crisis: Will it Slow Down the Economy?
The cumulative student loan debt continues to grow, and the future does not look promising for over 44 million borrowers owing a total of over $1.5 trillion who may hope to see their burdens diminished. It is no secret that going to college is expensive; in fact, attending a four-year college or graduate school is nearly impossible for most without financial help. Most tuition just continues to rise, along with student loan totals—tripled since 2005. With access to scholarships, grants, and student loans, most individuals are out of luck for continuing their education after high school.
Recent news shows that most borrowers exiting school with student loans owe $37,000 on average—and many later may be forced to delay getting married and having kids, along with other progressive and usually expected milestones such as buying a house or starting a business.
“There has been a big shift in terms of who should bear the burden of the cost of education,” said Benjamin Keys, a Wharton real estate professor with a specialty in household finance and debt. “We know the stories of our parents, that they could earn enough working as a lifeguard in the summer to pay for a semester of college. The growth of tuition costs relative to teen wages — indeed, all wages — has veered sharply upwards.”
Keys points out that borrowers are starting off at a disadvantage in comparison to decades before, along with experiencing ‘poor labor market entry.’ He isn’t sure whether they will catch up, stating that it depends on the labor market as well as economic stability in the US.
Recent data also shows a connection between student loan debt and the lack of—or lower—mortgages:
“A $1,000 increase in student loan debt lowers the homeownership rate by about 1.5 percentage points for public four-year college-goers during their mid-20s, equivalent to an average delay of 2.5 months in attaining homeownership,” wrote Alvaro A. Mezza, Daniel R. Ringo, Shane M. Sherlund and Kamila Sommer in a recent article.
Overall, the worry is that as the student loan debt continues to grow, the economy will become strained. Student loan borrowers who are not buying homes may begin to stunt the construction industry, for example, with the economic repercussions trickling down from there. Other industries are affected too as millennials begin to use other options for transportation over buying their own cars. With restricted budgets and reduced spending, the economy could slow down in nearly every way.
Schools are rarely on the line for student loan issues in the end, and borrowers may be so desperate to get into the college of their choice that they will sign any agreement they need just to get in the door. A default later can mean collections lawsuits, judgments, wage garnishments, interception of tax refunds, and much more.
Have you experienced problems with your loan service provider or student loan program, or are you in danger of defaulting on your student loan? Contact Fitzgerald & Campbell, APLC now so one of our experienced student loan debt attorneys can review your case and discuss all the available options with you. Our attorneys have decades of experience in serving clients as they navigate through challenging financial situations, to include student loan issues, bankruptcy, and other debt management processes. We are here to help! Call us today for a free consultation at (855) 709-5788 or email us at firstname.lastname@example.org.
Posted in: Student Loan Debt