Student loan debt, including federal and private loans, totals about $1 trillion now. That is higher than auto loan, credit card and home equity debt combined. In fact, student loan debt is the second-largest form of consumer debt, after home mortgages.
The CFPB’s student loan ombudsman draws parallels with mortgage crisis and says student debt is hurting the housing market and the economy.
The housing recovery remains on track. But high levels of student debt threaten to hang over the residential real estate market for many years, acting as a drag on both household formation and higher prices.
At the height of the housing boom, the U.S. was producing 1.4 million additional households every year. That figure plunged to 500,000 in the Great Recession. The number of new households is expanding again but remains stuck at 700,000—half the peak level. One big reason is underemployed new college graduates struggling with student debt and unable to contribute to the economy.
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