Going to school seems to be more expensive each year, and the level of debt has now reached the point where the over $1 trillion in collective student loan debt is starting to affect the entire U.S. economy and slowing it down.
Students have started accumulating more and more debt as they head to college, causing many to amass more than $30,000 in loans and other related debt after only one year of study. This is despite choosing the more frugal options of in-state tuition, minimal spending, and full time jobs over the summer breaks.
As the education progresses so does the debt, making the first years off campus additionally challenging. Starting off on their own has become a huge struggle, so a lot of young people delay a lot of milestones in their life, including buying a home, getting married, or having children.
With the carry-over effect of the debt, students have trouble becoming truly independent after they are no longer in school, reshaping the entirety of the U.S. economy in the process. This distortion can be seen as an ever increasing number of students fear leaving their parents’ homes in order to add to their already crippling debt. The overall effect of this is less movement in the economy, particularly in real estate and auto purchases.
As recent surveys by Bankrate and Pew Research Foundation respectively have shown, student loans are slowing down millennials in buying their first homes, saving for retirement, or buying new cars, and that more millennials are still living in their parents’ homes today than five years ago. All of this, despite the fact that the unemployment rate has dropped significantly, and overall earnings are rising.
With cost spiraling out of control, the government needs to look at ways to relieve some of this burden if it wants to find an efficient way to get consumer spending up, as most people know, younger people love to spend if they can, as it stands many cannot.