Quick Answer: Student debt has grown from 3.1% to 8.8% of all debt since 2004, creating generational financial burdens that prevent homeownership and retirement savings. This economic drag may eventually force policy changes, including potentially allowing student loans to be discharged in bankruptcy again.
The amount outstanding on student loan debt continues to increase past the point it blew the roof off how much people owe on all credit card debt. Imagine, people owe more in student loan debt which is nearly generational debt. In most cases it can’t be discharged in bankruptcy and with parents and grandparents co-signing for some of these loans it is dragging entire families down.
It is the fact student loan debt will create a slowdown of the economy that it will receive government attention and options for consumers in the years ahead.
Our economy doesn’t work if consumers aren’t spending and if people become so mired in debt we might even see the return of discharging student loan debt in bankruptcy. Hey, it could happen. Private student loan debt was dischargeable until 2005.
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USA Today has a story out which bring up some interesting points on this economic drag subject.
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Rohit Chopra, student loan ombudsman at the federal Consumer Financial Protection Bureau said, “You may be unable to save, unable to put away money for retirement.” “Many borrowers are telling us their dreams of owning a home or starting a small business may be out of reach.”
From generational debt to generation killing debt, student loan debt has now grom to 8.8 percent of all debt owed, up from 3.1 percent in 2004.
“Of those carrying student debt, about 40 percent say they have postponed contributions to retirement plans or delayed car purchases, 29 percent have put off buying a house and 15 percent have postponed marriage, according to a new survey from the American Institute of Certified Public Accountants.
Six in 10 respondents said they regretted their choice of college financing. The current spiral in student loans is feeding an ever-growing cycle of more spending, higher tuition — and even more loans.”
Read the entire USA Today story, here.
But a time will come when more will have to ask themselves if they should even go to college. It was the focus of this recent article.
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Great article, this is a pretty hot topic right now. Have you been following Senator Elizabeth Warren’s push to get Congress to lower student loan interest rates to the same rate the Federal Reserve offers big banks??? (http://www.huffingtonpost.com/2013/05/13/warren-student-loan-petition-lower-rates_n_3267028.html)
Warren is a real sharp lady and I really like her position on the mortgage relief settlement as well.
Also, I think there was a typo in your article, “debt has now grom to 8.8 percent” just FYI.
Yes. Interest rates are one thing but meaningful repayment options are another.
This is a great article. What can we do as student debtors to get the government to look at this issue with open eyes, looking into the future?
Contact your Congressional representatives and let them know how you feel.