Well, if you have a child going to college any time soon expect some major debt. Now we often hear that college loan debt is getting worse and that costs are skyrocketing, but now we have a new study proving it. According to a new report from the New York Federal Reserve, total student loan debt has tripled over the last 8 years.
The report finds a correlation between student debt and future issues with borrowing in other borrowing situations in life. For instance, the percentage of people who are buying homes and have student loan debt has fallen from 9 to 4 percent. The mortgage market is not so favorable to those with a large amount of debt already.
Many people are now thinking about the domino affect of student debt on the economy. Now young adults who are dealing with student loan debt are dealing with the choices of what to do about paying back their loans. In the previous decades, many would use large portions of their paychecks to pay down the debt. But instead it is looking like many students now are using their paychecks to spend on other things and are simply paying minimal amounts down on their debts.
The growth in student loan debt is due to more students attending college, more parents taking out loans to cover their child’s education and not having many options to discharge the debt. With the sequester slowly approaching it is no surprise that this is just another issue that we must all think about when it comes to budgeting the future. Spending is a major issue in this country right now, and until the economy gets better, it seems that this will continue to be one of those cyclical issues that will fix itself when things get better.