The financial effects of America’s still-growing student-loan debt can last a lifetime, writes Charlene Crowell, a communications manager with the Center for Responsible Lending (CRL). The national, nonpartisan public policy organization Demos found that 39 million Americans have used student loans to fund college education. Demos' report, "At What Cost: How Student Debt Reduces Lifetime Wealth," found that an education debt of $53,000 will lead to a $208,000 loss of wealth over a lifetime. If current trends continue, student-loan debt will reach $2 trillion by 2025. The current $1 trillion in outstanding student debt could lead to a total lifetime loss of $4 trillion for affected households.
While a college education is still a path to a middle-class life, evidence suggests that student debt is more detrimental to consumers' financial futures than previously believed. Lost lifetime wealth, the report says, will reduce two-thirds of retirement savings by $134,000, with the remaining third lost from lower accumulations in home equity. Debbie Goldstein, executive vice-president with CRL, said, “The problem is particularly serious for students of color and also for those who attend for-profit colleges, which leave students with much larger debts and a higher risk of default.”