September 12, 2018
Read time : 5 min

College can be the best, most memorable four years of most people's lives, but it can also prove to be financially draining and stressful - particularly in terms of student debt.

Superficially, student debt might appear to be a personal problem - one that impacts only the individual who borrowed money to fund his or her dream for a successful future. But the truth is, student debt is more than a personal problem: It's one that can adversely affect the economy in many ways.

Student debts impact on the economy

Federal student loans

According to the Federal Reserve Bank of New York, outstanding student loans have reached just under $1.2 trillion, quadruple the rate in 2004. In fact, the nation's student loan debt has grown by 170% in the last ten years, according to the Financial Times. William Elliot, the Director of the School of Social Welfare at the University of Kansas, says that these outstanding student loans will hinder the nation's economic recovery.

For instance, when students are most focused on repaying student loans, it sucks the purchasing power out of the national economy. With boatloads of debt looming over them the moment they step out of college, students are least focused on engaging in economy-bolstering activities, such as buying a home, purchasing a car, getting married or starting a new business or venture.

Their incomes are swallowed whole by student debt, leaving few disposable dollars to fund much else. In turn, their inability to make purchases and open businesses hinder the nation's job and economic growth.

Add to that the fact that many students, particularly those now in their 30s who still have outstanding student debt, are finding it more and more difficult to pay back these loans. It's easy to see why student loans are commonly speculated to be the next big bubble to pop after the financial recession of 2008.

A home for sale

Another factor to be considered is that defaulting on a student loan has a strong, detrimental impact on credit, which limits students' abilities to make big-ticket purchases that keep the economy going. For example, many of those who find themselves buried under the weight of student debt can find it near impossible to purchase a home since this type of purchase is so heavily reliant on good credit.

As the cost of education rises and student loan debt becomes an increasingly common phenomenon, it can inevitably become a major barrier to education, preventing students from attending colleges and universities because they simply cannot, or choose to not, afford the debt. If fewer students attend colleges and universities, the U.S. economy is likely to grow less competitive at a global level.

Gain financial knowledge to help secure your future

Up to Us students educate their peers

For those pursuing higher education, it's not too late to educate yourself and those around you on how you can make a difference in the fiscal future of our nation.

The Up to Us program is a student-led campaign designed specifically to help Millennials understand how they can take action to achieve a fiscally sound future for our nation by raising awareness on campuses about the potential negative effects shortsighted fiscal policies can have on their future and the national debt. To learn more, visit