Suzie Agrees with Me

I mentioned in an update several months ago how crippling student loans are becoming for first time home buyers. Suzie Orman stated in an article on CNBC this past week “If one were to ask me what I think is the most dangerous threat to our economy, the answer is very simple: student loans.” Here are some statistics to consider (according to Transunion):

• Current amount of student loan debt in the United States: $1,200,000,000,000 (that’s $1.2 trillion)
• Total student loan debt has grown more than 150% since 2005
• Costs have “only” grown 22% in that same time period – so inflation is not the culprit to the loan epidemic
• In 2005, student loans accounted for less than 13% of the total debt load for adults age 20-29. Today, student loans account for nearly 37% of that group’s outstanding debt.
• The average loan balance for that group has risen from $15,900 in 2005 to $25,500 in 2014.
• Mortgage debt represented 63% of total debt for this group in 2005 and now is less than 43%

It’s pretty easy for me to see what is happening. I’ve felt it for several years, but when I see these statistics, it confirms what I’ve been thinking. Student loan debt is a significant detriment to a young person’s ability to buy a home. What I’m recognizing as a huge obstacle for homebuyers, Suzie sees as an even bigger threat – to our economy as a whole. She added, “When students of the greatest nation on Earth are buried with student loans, their ability to buy a home, to have disposable income, to be a vital participant of the economy, is greatly reduced.”

We have to encourage our kids, our grandkids, and even our neighbor’s kids, that there is a better way. Postponing college, going to junior college for a couple of years (a great option in Tennessee now), working a job or two through college, living at home if necessary, and seeking out every grant and scholarship possible are just the ones that come to mind. We also need to encourage parents to help as much as possible – and plan for it! Believe me, with five kids, this is something that is regularly discussed at my house. Sending the future homebuyers of America into the world with an average of $25,000+ in student loan debt is not the way they should begin adulthood. If this trend continues, we will continue to see the age of our first time homebuyers get older and older.