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Economic recovery may be hindered by student loan debt

Apr 05, 2012 Walt Wojciechowski

When young adults graduate from college, most expect to get a steady paying job and start making money right away. Yet after the 2008 recession, that is no longer a guarantee. As more graduates default on student loans, sending their consumer credit scores plummeting, the economy is also affected. The Associated Press suggested the recent finding that student loan debt topped $1 trillion at the end of 2011 puts the already weak economy on shaky ground and has the potential to cause yet another financial crisis. The source explained that the average amount of student loan debt taken on per borrower is over $25,000, representing a 25 percent increase over the last decade. "When student loans don't get repaid, debts are going to be transferred from the borrower to the taxpayer," chief U.S. economist at IHS Global Insight told the A.P., expressing that the federal deficit will increase due to defaulters.  Sixty percent of respondents to a recent PNC survey said they were stressed because of their outstanding student loan debt. Student loans are the most frequently reported cause of debt for citizens in their 20s, with over half of those surveyed saying they faced student debt.