USA Today parses through New York Federal Reserve’s latest report (pdf) on Household Debt and Credit and finds that for the first time, this year the amount of student loans will surpass the $100 billion mark and the outstanding balance will exceed $1 trillion.
That means the amount of credit card debt and student debt is about equal, reports the New York Fed. USA Today reports that’s a dangerous prospect, because unlike credit card debt, student loan debt survives bankruptcy:
The credit risk falls on young people who will start adult life deeper in debt, a burden that could place a drag on the economy in the future.
“Students who borrow too much end up delaying life-cycle events such as buying a car, buying a home, getting married (and) having children,” says Mark Kantrowitz, publisher of FinAid.org.
“It’s going to create a generation of wage slavery,” says Nick Pardini, a Villanova University graduate student in finance who has warned on a blog for investors that student loans are the next credit bubble — with borrowers, rather than lenders, as the losers
The Washington Post explores another aspect of the fed’s report. They point out this graph:
They note that since the peak of the 2009 crisis, Americans have “become increasingly able to pay off their credit cards and mortgages. But the student loan debt crisis has continued mostly unabated.”