What Skyrocketing Student Debt Means For the Economy
Borrowers with huge student loan balances are unlikely to be able to take on a mortgage loan because many will fail to meet the debt-to-income limits. The lack of access to credit will likely limit demand not just housing, but also for consumer goods.
Of course, at least some part of the high delinquency rates can be explained by current economic conditions so if the job market picks up, the rates should decline.
Despite the dire trends in student loans, the economists do note that there is still a strong economic incentive to borrow for education. Americans with a bachelor's degree or higher earn nearly double that of high school graduates. Unemployment rates for those with a college degree are also lower.
-- Written by Shanthi Bharatwaj in New York.
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