Student Loan Debt Strangles Budgets

March 28, 2014
Associated Press 
student loan news
About 37 million Americans are saddled with a combined $1 trillion-plus in student loans, and they may never catch up with peers who graduate without this financial burden. Experts say the disparity is contributing to a widening gap between the wealthy and the rest of the nation.

Graduates who do not need to worry about paying off student debt can immediately build equity in housing or stocks and bonds, and therefore have more time to see their investments grow. In contrast, indebted graduates can spend years or decades paying principal and interest on loans. The median 2009 net worth for a household without student debt was $117,700, as calculated by a University of Kansas report last year, compared to just $42,800 for a household with outstanding student debt. A 2012 Pew Research Center analysis found that about 40 percent of households headed by someone 35 or younger have student loan debt.

Software engineer Allen Aston estimates that his full academic and financial-need scholarship at Ohio State University allowed him to avoid about $100,000 in debt. With no loans to repay, he is contributing 6 percent of his salary to an employer-matched retirement fund. In contrast, tax attorney Gregory Zbylut pays $1,300 each month toward the nearly $160,000 in student loans he has had since 2005. Zbylut has been turned down twice for a mortgage and would have married his fiancee by now if not for his debts.

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