Student Loan Debt Slowing Down Economic Growth?

Author: Luis Trujillo
Published: March 08, 2012 at 10:14 pm

There is a new stirring debate that has Congress and others talking once again. Everyone knows that the levels of student loan debt are unsustainable. For some it’s a major concern. The housing market has not recovered, and new buyers are a dime a dozen ever since 2005. So what’s the big deal?

Students who graduate with student debt are more likely to rent instead of buying a house for the simple fact that they owe money in loans. It’s obvious that the student loan crisis is a big concern even for Obama, as indicated by his statement to colleges all over America to put a cap on tuition costs.

The crux of the problem might not be tuition but a lagging housing market in the future, due to a lack of finances for the many graduates. The NACB recently commented in their report The Student Loan “Debt Bomb”: America’s Next Mortgage-Style Economic Crisis?: “… as with the mortgage foreclosure crisis, the staggering amounts owed on student loans also will have repercussions for the broader economy. Just as the housing bubble created a mortgage debt "overhang" that absorbs the income of consumers and renders them unable to afford to engage in the consumer spending that sustains a growing economy, so too are student loans beginning to have the same effect, which will be a drag on the economy for the foreseeable future."

It’s no wonder that pundits are talking about the possibility of this dark situation taking place. The country will need to face this sooner or later, and the only option some see is for the government to grant loan forgiveness to students.

This is opposed by those who feel that it’s an obligation for students to pay back what they owe because it will ultimately be on the ticket for every tax payer in America once again. Can America afford another sort of bailout? That’s a question that will need to be answered sooner or later.


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Article Author: Luis Trujillo

I write on topics of financial aid and college life on several sites including Fox News, Examiner, Grockit and MoneyTalksNews. I have a passion for helping youth and I've worked with youth since my sophomore year in high school. I truly love to serve the youth. …

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