Home Formation and Student Debt

"Christ. Seven years of college down the drain. Might as well join the Peace Corps."
--John 'Bluto' Blutarsky (Animal House)

Mike Shedlock reviews a recent study on college student debt. Student loan debt now totals $1.4 trillion, which amounts to about 35% of non-housing debt. More than half of all student borrowers have debt greater than $50,000.

One consequence of student debt is that it postpones family and home formation while students pay down their loans. The delay in buying a first house is estimated at about seven years. This is a headwind to economic growth.

While cheap student loans certainly benefit the colleges and universities who receive the borrowed funds as payment for services rendered, college grads who struggle to dig out from underneath student loans serve as a long term drag on the economy.