Today, the Huffington Post reported on a new study from the Federal Reserve Bank of New York that has shocking numbers about the ballooning student debt market. In the years from 2004 to 2012, outstanding student loan debt has roughly tripled in size – all while other forms of debt have shrunk.
For example, fewer people with student loans are buying homes, according to data in the report. Of borrowers ages 25 to 30 who are taking out new mortgages, the percentage of those with student debt has fallen by half, from nearly 9 percent in 2005 to just above 4 percent in 2012.
The NY Fed report sees a connection, stating, “The higher burden of student loans and higher delinquencies may affect borrowers’ access to other types of credit and the performance of other debt.”
The numbers point to a serious problem: students are going into increasing amounts of debt to pay for skyrocketing college costs, and the cost of repaying those loans after graduation is diverting their hard-earned money away from more productive uses. That’s not just a problem for the individual borrower, but a problem for the consumer economy we all participate in.