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Impact of student loans

March 16, 2012 by · Leave a Comment 

In 2011, outstanding student loan balances were closer to $1 trillion. This was more than the outstanding credit card debt for the same period. Recent college graduates carry an average of $25,000 student loan debt. This is a heavy burden on recent college graduates of 25 to 34 years old. Some higher studies college graduates especially in the medical field carry even larger student loan balance of over $125,000.

Majority of student loans are co-signed by their parents. This has become an obstacle for those parents when they look for financing for other purposes.

In a very low mortgage interest rate and depressed housing price environment, student loan debt is preventing new graduates from purchasing homes. This has an impact on the struggling housing market that is trying to recover. According to a recent study by the Federal Reserve, only 9% of the 29-34 year olds obtained first time home buyer mortgages between 2009 and 2011. Compare this with 33% of home buyers aged 25-34 in 2001.

More and more debt burdened recent graduates are living with their parents. In 2011, this group accounted for about six million of the U.S. population, according to Realtors group, an increase from 4.7 million in 2007.

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