YOUR MIND ON MONEY: Runaway student loan debt concerning

2013-07-04T09:06:00Z 2013-07-04T17:25:24Z YOUR MIND ON MONEY: Runaway student loan debt concerningF. Marc Ruiz Times Business Columnist
July 04, 2013 9:06 am  • 

A study released in April by the Federal Reserve Bank of New York showed home ownership among individuals paying off student debt is 36 percent lower than among individuals of similar age without student loan debt.

A similar trend could also be seen in new car loans. Data also showed the average student loan debt balance is $24,800, and aggregate student loan debt in the U.S. now exceeds $1 trillion.

These findings are concerning. While a mortgage and a new car does not determine one’s success, both of these major purchases do reflect a certain level of financial confidence in the borrower. The findings in the study could be used to conclude many of our college graduates are not finding adequate employment, but the findings could also indicate the student loan debt itself is having an adverse longer term financial impact on borrowers.

In my experience education, choices are some of the most complicated decisions a family will make. Often time’s factors such as parent pride, student athletic ambitions or family traditions take precedence over what could be considered fundamental value analysis. As student debt levels continue to attract attention and additional studies are conducted analyzing longer-term consequences of student debt burdens on families, hopefully consumers will become empowered to make more informed decisions.

If and when consumers begin demanding more reasonable value from our colleges and universities and as high levels of student loan debt become increasingly viewed as problematic, perhaps some of the runaway cost structure in the educational system may also begin to be reined in as well.

I believe it is no accident two sectors of our economy experiencing much higher levels of cost inflation than the general economy, health care and college education, are also two areas involving high levels of federal government meddling and manipulation in how services in the sectors are funded.

As in health care where the government is once again manipulating the system in a desperate attempt to control costs, much of the student loan debt in the U.S. will also prove to be a burden on our nation as a whole. Unfortunately, in a trend reminiscent of the mortgage problems at Freddie and Fannie, because of the way the student loan market is financed, taxpayers will ultimately end up holding the bag for much of this $1 trillion burden when borrowers default.

As the dad of a college student, I have experienced firsthand how easy it could be to amass student loan debt. But easy money is rarely money well spent, as we head toward fall tuition payment time I encourage all parents and students to take a step back consider all the options before clicking the “accept” button on the screen.

Opinions are solely the writer's. F. Marc Ruiz is a local financial columnist. Reach him at

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