Hot Jobs Market Will Ease the Student Loan Crisis
The evidence suggests that more young people are choosing to work instead of pursuing educations of questionable value.
A strong labor market has many young people seeking work instead of an education.
Photographer: Justin Sullivan/Getty Images
Student loan debt has more than doubled over the past decade and now exceeds $1.5 trillion. If there is one bit of good news, it’s that new data from the Federal Reserve Bank of New York shows that student loan debt has just about stopped growing, likely in part to a tighter labor market. So as long as the labor market continues to stay strong, student loan debt shouldn't be as much of a burden to the next generation of workers as it has to the last one.
The rise in student loan debt can be attributed to many factors, and not just the rising cost of higher education. Demographic forces played a role as the large Millennial generation passed through its peak higher education years in the 2000's and 2010's. Another has been the impact of the Great Recession, both by cutting state funding for public universities, which led to higher tuition, and for pushing some young people from the labor market and into higher education as a way of making themselves more employable. Ernie Tedeschi, a researcher at Evercore ISI, has shown that a 0.5% decline in the prime-age labor force participation rate between 2010 and 2012 was due to an increase in school enrollment.