Introduction: The economic recovery, what exactly is it? Some would say the ability for the country to rebound after a major downturn in the financial markets. Others would simply say the ability for me to purchase a new home for my family. The term definitely has different meaning for different people. Today, we’ll speak about the impact student loans has on the economic recovery and how we think students have been affected by them.

Cost of school increasing: Over the past 20 years, we’ve seen major increases in the cost of advanced education. This increase includes but not limited to tuition, books, dining and room and board. Although the increases are killing the pockets of parents and students, it’s filling the pockets of the federal government. The government gets to reap the benefit of the interest paid towards loans which is recycled back into the financial system somehow. The banks are also excited to hand out money to assist because of the return they will obtain from interest. Also, simple math says the more expensive school gets, the more loans you are required to take out just to make ends meet.

Economic Recovery Graph

Economic Recovery Graph

Increasing of Financial Understanding: A glimmer of light regarding the synergy of the financial crisis and the increase of student debt is the increased literacy gained by students. Years ago, most students paid no attention to and loan statements and some had no regard for their credit standing either. What has happened is students have seen their parents go through tough financial times during the financial downturn and that’s made them much more aware. Students are now reading books regarding finance, attending seminars hosted by universities and most importantly shying away from the credit card craze. By them know the impact of the student loans and the effect of paying them on time, they have a positive effect on the US economy.

More Debt for Federal Government: As we know, this country is fueled by debt from both consumers and businesses alike. The government holds debts such as home loans and student loans in high regard. Both home and student loans are almost required in normal instances from consumers. Only people with older frames of thinking consider operating without debts to make major purchases. The best thing regarding the economy is the more debt the government owns, the more interest it will accumulate over time. That’s why student loans are so beneficial.

One thing that’s for sure is that student loans will be here for quite a while. Again, our country is fueled on debt and the consumption of it. Students will continue to have the desire to attend colleges and parents will continue to do everything possible to send them. As the economy gets better, we may see a slight decrease in student loans due to parents having more money available from investments and wages from work but I can’t imagine a day where student loans will not have a major affect on the economy.