A new report out by the public policy organization Demos, confirms what I’ve feared for too long. Student loan debt robs people of retirement wealth.
The growing burden of student loan debt and the limited options to manage that debt are leading to more and more people becoming so caught up in financial slavery that their very ability to properly save for retirement is lost.
Demos predicts that nearly $1 trillion in outstanding student loan debt will lead to a total lifetime wealth loss of $4 trillion for indebted households.
The burden of large student loan debt is hitting students of color and those from lower income households the hardest. These students have less ability to pay for needed college education in cash.
The average level of debt from student loans is now at about $20,000 for public colleges and $33,000 at private for-profit universities. Public college costs are expected to rise as less state funding is available to operate these organizations.
But not only is the principal balance of student loans rising but what will be potentially paid in rising interest is growing as well. New student loan financing initiatives are poised to make the cost of borrowing more expensive as well.
Demos predicts households with student loan debt will lose out on the ability to use the money otherwise dedicated to servicing student loan payments and those households will retire about $207,000 poorer. – Source