Some studies even find that total debt in the range of
The effects of these constraints compound over time. For example, households with a member carrying student debt have less than half as much saved for retirement as those without, when controlling for other factors. The burdens don't remain within families, either, as the debt constrains consumer purchasing and eventually may impact the national economy.
"Student loans today are a dangerous product sold at high doses to uninformed customers. For many middle-class students, these investments wifi pay off," said Dr.
The report," Student Loans Are Widening the Wealth Gap: Time To Focus on Equity," reviews the latest research on the effects of student loans on educational and financial outcomes. College graduates without outstanding student debt have nearly three times the net worth of student borrowers, while those with student debt have 41 percent less home equity than students with no debt. The burdens of debt persist late into life: According to the Federal Reserve Bank of
The report holds up children's savings accounts (CSAs) as an asset-based alternative to student loans. Students with college savings show improved educational outcomes before college, and are more likely to enter and succeed in college. The report identifies several features that make CSAs most effective, especially for low-income families: matching contributions, automatic enrollment, and allowable withdrawals for educational expenses before college.
"Encouraging student savings wifi help us transition away from dependence on student loans," said
"Student Loans Are Widening the Wealth Gap" contains a range of policy recommendations. In addition to expanding promising CSA programs, the report recommends making loan terms and conditions easier to understand for students, building a savings component into the federal Pell Grant program, giving students earlier notice about the financial aid for which they will qualify, and easing credit constraints for indebted graduates.
The Assets and Education Initiative is an office of the
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