The Fall Is Underway: Student Loan Debt is Dragging down the Economy

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This too is a plague weighing heavy on the back of the republic in the day of the manifestation of the fall of America!!!

Student Loan Debt is Dragging down the Economy

(Ryan Gorman) Student-loan balances have skyrocketed over the past decade, and that could have a very negative effect on the economy.

Outstanding student loans have nearly quadrupled since 2004, to just under $1.2 trillion, according to the Federal Reserve Bank of New York.

This happened as student-loan defaults have nearly doubled over that same time.

The average student-loan balance among people with bachelor’s degrees has risen from $15,000 in the mid-1990s to about $27,000, according to the Fed.

This is having a crippling effect on economic activity, says Barbara O’Neill, a specialist in financial resource management for Rutgers University.

“A lot of things are being postponed. You got what you call a crowding-out effect — people only have so much money,” she said. “There’s a lot of business activity that isn’t taking place … It’s a drag on everything.”

Fewer people are buying homes and cars, O’Neill says, because large portions of their income are being eaten up by student loans. They’re also less likely to start the small businesses that provide jobs and services that drive the economy.

“It has tremendous effects,” O’Neill said. “There’s also evidence entrepreneurial activity is down. When you have that big student-loan debt over your head, you’re less likely to take risks.”

This rise in borrowing, and the increasing number of people who are having a harder time paying off these debts, has led many to ask if student loans are the next bubble to burst….More Here

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