(NNPA)—A new research report on America’s still-growing student loan debt found that its financial effects can last a lifetime.
According to Demos, a national, nonpartisan public policy organization, 39 million Americans have used student loans to fund college education. An education debt of $53,000 will lead to a $208,000 lifetime loss of wealth. If current student borrowing trends continue, student debt will reach $2 trillion by 2025. Additionally, a $1 trillion in outstanding student debt will lead to a total lifetime loss of $4 trillion for affected households.
“Though a college education remains the surest path to a middle-class life, evidence has begun to mount that student debt may be far more detrimental to financial futures than once thought, particularly for those with the highest levels of debt: students of color and students from low-income families,” states the report titled, At What Cost: How Student Debt Reduces Lifetime Wealth.
Lost lifetime wealth, according to the report, will reduce two-thirds of retirement savings by $134,000 with the remaining third being lost from lower accumulations in home equity. Demos attributes these wealth losses to loan repayments and the amount of time required for repay them in full have on savings and delays in buying a first home.
Further, the report warns of the risks that spiraling student loan debt has on the nation’s economy.
“Student debt’s financial impact won’t just be felt by the nearly 39 million Americans who currently have student loans. The drag of student loans on indebted households’ purchasing power and ability to save will slow an already-sluggish growth for the entire U.S. economy,” the report stated. “If we wish to avoid this fate, we need to take immediate action to both reduce the burden of existing student debt and prevent future debt from piling up even higher.”