Student Loan Debt Seen as Growing Threat to the Economy

Move over, mortgages. Get out of the way, Greece. Another economic doomsday scenario is emerging.

Student loan debt has reached about $870 billion, exceeding credit cards and auto loans, and balances are expected to continue climbing, the Federal Reserve Bank of New York said last month. In February, the National Association of Consumer Bankruptcy Attorneys referred to a “student loan ‘debt bomb’” and wondered if it was shaping up to become “America’s next mortgage-style economic crisis.” Such a burden could crimp an already weak economy.

“Student debt poses a large and growing threat to the stability of our economy,” Illinois Attorney General Lisa Madigan testified March 20 before a U.S. Senate judiciary subcommittee hearing in Washington on the looming student debt crisis.

“Just as the housing crisis has trapped millions of borrowers in mortgages that are underwater, student debt could very well prevent millions of Americans from fully participating in the economy or ever achieving financial security,” Madigan said.

Read the rest of the article at LoanSafe