Going through college without college debt can be a relief to both the student and the economy. Due to the hustles associated with college debt, many millennial students are saving to ensure that their children go to college without any debt. According to research conducted recently on the American population, it was revealed that millennial-aged between 19-34 years owed the Federal Reserve an average of $9,180 per student. On the other hand, older parents still owed the Federal Reserve a debt of $1,000 each. These two generations are making a great stride to ensure that their children learn without debt by saving $310 per month for the millennial and $205 per month for the older generation.
Federal Reserve officials concerned about college debt say that it’s very encouraging to see former students making these strides. Children education has overtaken other saving priorities according to the same research. While older parents are likely to choose retirement savings, they are saving substantial amounts when it comes to their children’s education. Millennial parents said that they would save by eating less, living a simpler life and spending less on themselves.
This news came at a time when the Federal Reserve expressed concerns over the effect that the student loans were having on the economy. In the last one month, the Federal Opens Markets Committee decided to increase the rates of a short term loan for students up to one percent. In an age that is driven by low productivity and aging population, the Federal Reserve is trying to establish a suitable interest rate for the student loans. In total, American students owe the government as estimated $1.3 trillion in student loans.
Student loans interfere with the economy in so many ways with the most common effect being home ownership. After completing school, students would rather pay the loan rather than take a mortgage. The decline in state funding for education has led to skyrocketing tuition. Compared with statistics from 2006, the present student loans are a 170 percent increase from the time. Some analysts have suggested that making college education free would cost the Federal Reserve less.