Go to college. Go broke doing so.
Bruce McCain, chief investment strategist for Key Bank, with more than 150 branches across New York state and one branch in Fairfield County, Conn., said this week in his economic assessment that student loans have vaulted to the No. 2 spot for total American debt, outpaced only by mortgages.
Student loans have soared in popularity over the past decade, McCain reported, with the aggregate student loan balance reaching $966 billion at the end of 2012.
Student debt now exceeds aggregate auto loan, credit card, and home-equity debt balances, said McCain, making it the second largest debt of U.S. households behind mortgages.
While student loans provide access to college, the extensive debt early in life is impacting young adults”™ post-schooling economic activity, McCain said.
According to the National Association of Realtors, the median age of first-time home buyers has been historically stable at 30 years of age. Using home-secured debt as a proxy for home ownership among 30-year-olds, Key Bank”™s data show home ownership rates between 2003 and 2009 were significantly higher for 30-year-olds with student debt than for those without student debt.
“This fact makes sense,” McCain wrote, “given the higher levels of education and higher incomes. These more educated consumers are more likely to buy homes.”
However, this relationship changed dramatically during the recession. Homeownership rates for 30-year-olds with no student debt declined by 5 percent. At the same time, home ownership rates among 30-year-olds with student debt fell by more than 10 percent.
Now, for the first time in at least 10 years, Key reported, 30-year-olds without student loans are more likely to have home-secured debt than those with a history of student loans.
I honestly do not understand young people and their parents as well who let their kids going broke by applying for student loans without any steady financial ground under their feet. This is very irresponsible, you know. So by doing this, children and their parents sign up for a long term debt and erase he possibility for a mortgage. Yeah I understand that I am describing the situation in pretty dark colors, but aren’t so many people in the dark place right now? So many jobless carrying student loan debt burden… The situation is worth total reconsideration. Save up some, there is no specific age limit for getting a diploma!
Monica from http://northenloans.ca/