The surge in student debt may be linked to the wreckage in the housing market
Even as the financial crisis and Great Recession receded, student debt began to mushroom, presenting a new credit dilemma for the U.S.
The explosive rise of student debt – from half a trillion in 2007 to $1.3 trillion in 2017 – has been blamed for holding back homeownership, for dampening discretionary spending throughout the economy, and for saddling young people with burdens they couldn’t appropriately evaluate or prepare for.
Now an academic paper suggests the surge in student debt may be linked to the wreckage in the housing market. From the peak of the housing bubble in 2006 to the trough in 2012, national home prices tumbled nearly 30%, and home equity fell by more than half.