Household Student Debt Equals $208K in Lost Wealth, Study Says

Student loan debt has soared over the past decade, quadrupling from $240 billion in 2003 to more than $1 trillion today.

But if current borrowing patterns persist, student debt levels will reach $2 trillion in 2025, according to the public policy research organization Demos.

In a new study, Demos found that the average student-loan debt burden for a two-person household with bachelors? degrees from four-year universities ($53,000) leads to a lifetime wealth loss of nearly $208,000.

This analysis compares student-debt households with similar households with no debt.

Demos concludes: ?The drag of student loans on indebted households? purchasing power and ability to save will slow already-sluggish growth for the entire U.S. economy. If we wish to avoid this fate, we need to take immediate action to both reduce the burden of existing student debt and prevent future debt from piling up even higher. ?

Here are three other key findings from the study:

• Two-thirds of this loss ($134,000) comes from the lower retirement savings of the indebted household, while more than one-third ($70,000) comes from lower home equity.

• The results mean that the $1 trillion in outstanding student loan debt will lead to total lifetime wealth loss of $4 trillion for indebted households.

• The wealth loss will be greater for households with larger-than-average levels of student debt: students from low-income families, students of color, and for-profit students.

Read the full report.

Source: http://feedproxy.google.com/~r/ecreditdailycom/~3/WjIxK7-1TDs/

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