Once upon a time, we invested in our young people so that they could enter the world without debt. Now, we turn them into deadbeat debtors before they're old enough to legally buy a drink, left far behind their financial betters.
The truth this week came courtesy of the Consumer Financial Protection Bureau and the Wall Street Journal, whose data parsing revealed that about one in five college graduates who borrowed for tuition via the federal direct loans program are not paying the money back.
In other words, a lot of people who recently attended college are in deep financial trouble. This should come as no surprise. [...]
The ever-growing albatross of student debt also makes it a lot harder to put money aside for the future. Even as Americans are being all but hectored by the finance establishment about the need to save for retirement, the progressive thinktank Demos released a report last week that suggests we are asking for the impossible.
According to Demos' research, not only are people with student debt unable to put as much aside in savings, they're also purchasing less expensive homes, and at older ages than their unencumbered peers.
This year's graduates with student loans have more than $26,000 of debt; Demos estimated the average household would lose more than $200,000 in future net assets.
All of this costs them future investment gains. While less expensive homes seem admirably frugal, even if those homes gain value at the exact same rate as more expensive homes, their owners will still end up with less money.
Read the full report: At What Cost? How Student Debt Reduces Lifetime Wealth