Natalie Kitroeff reports for the New York Times on the impact of student loan debt on the ability of graduates to rent or buy real estate in New York City:
For young people, moving to New York City hasn’t made much mathematical sense for decades. The jobs don’t pay enough, the internships don’t pay at all, and the rents are prohibitive by any sane standard.
But now add a new economic fact of life to that list: soaring student loan debt. More students are taking out bigger loans than ever before, and in the last 10 years alone, education debt tripled, reaching over $1 trillion. A record number of college students are graduating knee deep in a financial hole before they begin their adult lives.
She adds that some big-name economists are weighing in on the broader implications for the economy:
Economists are worried. Last month, former Treasury Secretary Lawrence Summers said that student loan debt was taking the life out of the housing recovery, and the Nobel laureate Joseph Stiglitz called the rising debt “an educational crisis” that is “affecting our potential future growth.”
I’m not criticizing the article — a good piece that includes profiles of recent graduates struggling with NYC’s real estate market and their student loan payments — when I say this:
We are at least two decades late in labeling the student loan debt situation a “crisis.”
Today, you’ll find plenty of news and commentary covering the student loan debt crisis. Elected officials are considering policy options as well. But the problem was in the making years ago, and the implications were clear to anyone who was paying attention.
In the 1980s, tuition levels began to soar above the rate of inflation, while grants and scholarships gave way to student loans as the primary form of financial aid, often at high interest rates. These trends continued largely unabated through the current economic meltdown.
Yeah, I take this one a bit personally. Over the years I’ve experienced a lot of eye rolls and sighs in faculty meetings when I’ve warned about a looming crisis in student loan debt and the role of legal education in stoking it. I’ve also been vocal on the impact of heavy debt on graduates who want to enter public service.
As with most overlooked crises, so much of the damage already has been done, placed on the shoulders of heavily indebted graduates. We’d better act quickly and meaningfully if we want to stop this one from getting even worse.