Opinion: Student loan debt is crippling young adults

Joe K. Cunningham | Guest columnist

One out of three young adults, ages 18-34, live with their parents.

With the American Dream being pushed further and further out of reach for younger generations, there seems to be no shortage of explanations. Those who have not purchased a home are generally painted as lazy or unmotivated. Yet most oftentimes, they already are paying the equivalent of a mortgage – just not for a home.

Student loan debt and the increasing cost of higher education driving it are two issues that have a profound impact on younger generations who are eager to gain financial traction. It actually affects all of us.

Since 1983, the cost of a college education has risen nearly five times the rate of inflation. Without doubt, they are growing physically and fiscally. In 2015, colleges and universities spent $11.5 Billion on new construction projects, an all time high. While a portion was allocated for the maintenance of older buildings, a large portion was used to create 21 million new square feet of space. All of this must be paid for, sooner or later, and with states decreasing funding to higher education, students are shouldering more and more of it. These costs that are being passed along have created a debt situation of colossal magnitude.

Student loan debt now exceeds credit card debt, affects more than 44 million Americans and is estimated to be $1.4 Trillion Dollars. It has become the albatross of at least one entire generation, if not two. At their commencement ceremony, the average college graduate in the Class of 2016 exited stage right with $37,172 in debt. This marked a 6% increase from 2015.

It should not be taken for granted that Americans are so easily afforded the opportunity to pursue a college degree. Yet, we should not marginalize the strings that are attached to these loans and who is pulling them. While not originally intended to be a profit generator, higher education has become a cash cow for not only colleges and universities, but for our federal government. One estimate based upon the Congressional Budget Office approximated the profit the government would turn on student loans in 2016 to be $1.6 billion. It would be naïve to believe the rising cost of tuition and student loans, from which schools and government benefit, just so happen to be the cost of doing business. Borrowing words from Oliver Wendell Holmes, even my own dog knows the difference between being tripped over and being kicked.

If you did not attend college in the last decade or two or you are fortunate enough to not be saddled with student loan debt, you may be thinking this is of no consequence, but the truth is it concerns us all.

The increase in student debt continues to have a direct impact on home ownership. An applicant’s debt, student loan or otherwise, is a major factor that discourages banks from giving out home loans. A direct correlation has been acknowledged between increasing student loan debt and home ownership. A recent study found that for every 10% increase in student loan debt results in a one to two percent decrease in home ownership during the first five years of exiting school. In summary, higher tuition and student loan debt depresses home ownership rates.

Fewer home purchases results in less property taxes generated that would otherwise help fund education for our children. Further, money being thrown at student loans is money that is not being injected into our economy that could help spur businesses, create jobs and enhance community development. Instead, a significant portion of a generation’s income is being placed into a closed-loop system in which higher education is the sole beneficiary.

The American Dream that was once in reach for younger generations has been sold out from underneath them. Sold to the institution of higher learning. If not sold --- at the minimum -- it is out on loan.

Joe Cunningham practices law with Lyles & Lyles, specializing in construction law and representing homeowners and homeowners' associations in Greenville, Charleston and other cities in South Carolina. He recently announced plans to run as a Democrat for the 1st Congressional District seat.