Student loans' effect on the economy seems like an Obvious Story. Student debt has tripled in the last decade to more than $1.2 trillion in total outstanding loans, and millions of young people are starting their lives with absolute wealth at, not just zero, but way below zero. It is, as Kevin Carey told the New York Times, "a big social experiment [to] send a whole class of people out into their professional lives with a negative net worth." If having high net worth makes us spend more—the "wealth effect"—an equal and opposite "student loan effect" should make student debtors spend less.
I say should, because it should be easy to prove that $1.2 trillion in student debt is an albatross around the neck of the economy. But then how do you explain all this counter-evidence...
1. Young borrowers who are current on their payments are actually more likely to have a mortgage than other young adults.
2. Among households under 40, student debtors are (a) just as likely to have a mortgage as non-debtors and (b) considerably more likely to have a car loan, according to Pew.
3. Student debtors are just as likely as non-debtors to have a car loan at 25, according to the New York Fed.
4. And, just as the Pew study found that they are equally likely to have a mortgage under 40, this NY Fed study found that they are about as likely to have home-secured debt at age 30.