Student debt in the United States is growing at an ever-increasing rate, putting college graduates and prospective students at a huge disadvantage in providing the same level of economic output as the generations that came before.
Student debt in 2019 totals up to an astounding $1.57 trillion, more than triple that of the amount owed in 2006. Over the past 20 years, college tuition and textbook costs have outgrown inflation rates more than any other consumer goods or services besides hospital service costs.
This could create a catastrophic situation which would mirror that of the housing market collapse of 2008. In the lead up to this ‘Great Recession,’ homeowners were given loans were unable to make payments on their debts causing enormous levels of defaults.
At the time of writing, 11.5 percent of all student loans in the US are in default. Considering the current rate of one million defaults per year, Urban Institute projects that by the year 2023, 40 percent of all student loans will have defaulted.
A 40 percent default rate would have huge implications for students looking to secure funding for education and have consequences that would affect all aspects of industries and further economic development and could even bring about a relapse of the housing crisis.
The current senator of Massachusetts and presidential hopeful, Elizabeth Warren, has proposed an education debt bail-out as an answer to the stacking debt similar to the relief that was provided to the banks during the previous recession.
If younger generations are not able to receive an affordable education, they will be forced deeper into a hole of debt with no ability to purchase or build houses, and have no savings to invest. This comes at an important crossroads where it is likely that the traditional financial markets will begin to suffer.
The cryptocurrency market could help to salvage the mess that the US financial policies have created over the past decades. By providing a monetary system which is transparent and not changed at the whims of those in power, that benefit those in power, people can start to equalize the playing field and hopefully dig their way out of the hole that they have been pushed into.
Are you still paying off college debt? How will Americans tackle this problem in the coming years? Let us know your thoughts in the comments below.