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Community Voices: Student loan debt stymies economic growth

Charlene Crowell | 8/29/2012, 9:32 a.m.

The domino effect of debt begins with a student loan and then delays the ability to qualify for a mortgage. With other consumer debt payments such as car loans and credit cards taking a larger share of net income, the ability to gain wealth is limited if not stymied.

Consumers opting for rental housing may find the monthly payment more affordable on a cash-flow basis; but no equity or wealth is derived on rentals. Further, as the rental-housing market has tightened, the cost of rental housing continues to increase — thereby leaving fewer disposable dollars to save for a home down payment.

And if parents or grandparents signed for a student loan, the benefits they worked for most of their lives are siphoned and tarnish what ought to be the proverbial “golden years.”

“Denied” reaches a thoughtful conclusion: “Policymakers who may be unmotivated by individual struggles of borrowers, or unconvinced of the extent of the problem today, would be wise to begin to view student debt in an additional light: as an encumbrance on the recovery of the housing market, and as a result, a potential hindrance to economic growth.”

Charlene Crowell is a communications manager with the Center for Responsible Lending.