Not just a student issue: the economic impact of student loan debt

As if the news about student loan debt couldn’t get any worse, a recent report by  TransUnion LLC showed some alarming statistics about student loan debt. In the video below, watch David Sirota of Salon and John Iadaola of TYT Network discuss the economic impact of excessive student debt and the effect on taxpayers.

For many, excessive debt isn’t just an issue right after graduation–it follows some graduates well into their thirties, forties, and even beyond. According to the Federal Reserve Bank of New York, 5.7 million people ages 40 to 49 were still repaying their student loans in 2012. That’s up from 3.3 million seven years ago.

Because the federal government backs student loans, the more that student default on these loans, the greater the federal expenditure. Sirota says this comes at a huge economic cost to the American economy

This is not just a student issue…this is a taxpayer issue, in a time of already massive deficits.”

According to Sirota, debt is “money pulled out of an economy.” If students are paying hundreds of dollars each month in student loans, they’re not spending the money elsewhere and stimulating the economy. This creates a vicious economic cycle because if people aren’t spending, organizations can’t afford to hire new workers, and students cannot find jobs to pay off their loans upon graduation.

The student loan debt situation is certainly troubling for current and former students. It’s understandable why students get overwhelmed try to ignore their debt. However, this is more harmful in the long run because it may result in fees, higher interest payments, and reduced credit for the borrower.

If you’re feeling uncertain about how to pay off your loans, there’s no need to panic. We can help you figure out a repayment plan that works best for your situation. Drop us a note on our contact page or give us a call at 1-888-234-3907. And for more guidance, check out our repayment strategies.