Melissa Cefalu, a veterinarian, and her husband Andrew, a chiropractor, have their dream jobs. But they’re living a nightmare of self-denial.

Buried under $365,000 of student loan debt, they never take vacations, instead snatching occasional long weekends with friends or relatives. Andrew drives a 13-year-old Chevy Tahoe. And rather than buy new clothes, Melissa, 35, makes do with her sister’s hand-me-downs.

“Every penny is accounted for” even though the couple’s combined salary is $125,000 and they live in the affordable town of Madison, Miss., Melissa says. “I love what I do but … I don’t feel my degree was worth the sacrifices we have to make every single day.”

Many analysts say the nation’s record high $1.34 trillion in student debt is also casting a long shadow over the economy, delaying home purchases, crimping consumer spending and inhibiting business formation. As President Trump sets out to juice an economy that has grown a lackluster 2% a year since the recession ended in 2009, these economists count student debt — along with an aging population and weak productivity — as another obstacle in his path.


“It delays the economic life cycle for the younger generation,” says Marshall Steinbaum, senior economist at the Roosevelt Institute. “People would have started their economic lives at zero and now they’re starting at a negative balance.” That, he says, widens the wealth gap and could have “negative consequences (on spending) that reduces (economic) growth.”

But with high school graduates poised to enter college later this summer, other economists say the oft-lamented “student debt crisis” is over-hyped.

“You’re paying a higher amount but your earnings are also higher,” says Mark Zandi, chief economist at Moody’s Analytics.
No one disputes that heavy student debt loads have become more prevalent as tuition has skyrocketed and budget-strapped states have doled out less money to public universities. Since 2007, total student debt has nearly tripled while the number of people with loans has climbed to 44 million from 28 million. The Great Recession prompted many young adults to stay in school longer, while many older laid-off workers returned to college.

In 2015, nearly 70% of college seniors graduated with student debt, up from less than half in 1993, and their average tab had tripled to $30,100, according to the Institute for College Access and Success. All told, about 20% of American adults and 35% of Millennials are burdened by student debt, according to a 2015 Gallup poll.

Wages have not kept up. From 2007 to 2015, average student loan balances surged 60% while average pay for recent graduates rose 13%, FitchRatings says. About 8 million borrowers are in default on their loans, damaging their ability to rent apartments, buy cars and even get jobs.

Continue Reading