We knew the moment when American student loan debt would exceed $1 trillion was close. But it came more quickly than expected, with the $1 trillion mark passed several months ago. Student loan debt is increasing as more people go to college, as college tuitions rise quickly, and as high unemployment leads people struggling to find work to fall behind on their payments.
This can have a ripple effect through the economy:
Rohit Chopra, student-loan ombudsman for the Consumer Financial Protection Bureau, said student debt could ultimately slow the recovery of the housing market. "First-time home-buyers are a substantial part of the housing market," Mr. Chopra said in a speech at the banking conference in Austin. "Instead of saving for a down payment, these borrowers are sending big payments every month."It's a major catch-22: people without college degrees are suffering in the labor market, facing higher unemployment and lower wages. But people who graduate with a lot of debt face employment and life choices constrained by that debt. Republicans are determined to make that worse; Republican House budget architect Paul Ryan, for instance, calls Pell grants "unsustainable," arguing that students should work three jobs to get through college. Part-time college students, though, face abysmal graduation rates. Many state legislatures, especially but not solely ones controlled by Republicans, have made deep cuts to funding for public higher education, forcing tuition ever higher. President Obama has taken the modest steps to alleviate student loan burdens that are available to him without Congress taking action. But what's needed is government support to make public higher education free, or at least so cheap it's genuinely affordable for everyone.