Student loans may not be the culprit for the sluggish economic recovery, according to an article by The Atlantic.
The hype about increasing student loans is false, wrote Derek Thompson in his article, which he backs up with a Pew Research Center report. After hitting the peak of average student debt in 2008, individual student loans are the lowest they have been since 1995.
Perhaps if any fingers about the economy could be pointed at the college-age population, it would be about the lack of car and home purchases. These are the two things that power a recovery.
Students substitute the money that would have gone into those expenses to pay for college costs, according to a study by the New York Fed.
The loans in this sense are replacing investments that 20-something-year-olds would be placing on two things that help fuel the economy. Whether or not this age group would be buying homes and cars if the tuition burden wasn’t present is unknown.
For students, this investment could be a much smarter investment than a home or car. Although the value of post-secondary education is commonly argued in media, education is safer to invest in.
The increased income that college graduates generally receive has tripled in the last 30 years, making the gap between those who had no higher education increasingly larger.
Copyright 2015, Deseret News Publishing Company