Is Student Debt the Real Fiscal Cliff?
The fiscal cliff was a highly political event that occurred earlier this year. It involved a combination of tax cuts expiring and a minuscule reduction in government spending. Many feared it would cripple the already sluggish economy, but the real fiscal cliff appears to be the expanding student debt bubble.
A college degree was once considered to be a guaranteed path to the American Dream. However, rising debt loads have many graduates living a financial nightmare, and the side effects are impacting other areas of the economy. Due to monthly loan payments, about 47 percent of student borrowers have delayed buying a house, according to a new survey by Young Invincibles, an organization that represents the interests of young adults. The survey focused on 9,523 graduates with private student-loan debt.
The same percentage of borrowers also put off buying a car, while 35 percent said they postponed starting a family. Twenty-three percent of respondents stated that they put off starting a business, and 15 percent said they tried to receive a mortgage but were denied. Even more concerning, 76 percent said they saved less for the future, which will undoubtedly cause additional problems down the road.