America's student loan debt is a lot higher than previously believed, a fact that may create a drag on the economy for years to come, according to a new report from the Consumer Financial Protection Bureau. Total debt passed $1 trillion late last quarter, officials told a banking conference in Austin yesterday, making it 16% higher than an earlier estimate from the Federal Reserve Bank of New York, the Wall Street Journal reports.
Officials blamed the surge on increased college enrollment, which is due in part to the weak labor market, and tuition hikes, which can partly be traced to cuts in state funding. The interest rates on existing loans are growing as well, because as many as one in four student borrowers have fallen behind on their payments. The findings are particularly troubling for the housing market, because debt-laden young people are less likely to buy their first home.