04/12/2013 10:31 am ET Updated Dec 06, 2017

Student Loan Debt Creates Drag on Economy and Older Americans

Student loan debt is fast becoming a major problem in the United States. The level of student loan debt has now exceeded the amount owed on all credit cards. And it's growing.

While many of us have been crying out for some changes to the options consumers have to best handle student loan debt, no new changes are on the forefront. At least no good changes.

One upcoming proposal is to eliminate the fixed rate interest charged on student loans and instead make them variable interest. In good times that's a benefit but in times of high interest rates, the cost of servicing student loans will become a bigger burden.

Another change is an increase is scam companies that are popping up to charge student loan holders for help with their loans they can get for free from the Department of Education.

For the first time I can think of, the Federal Reserve has expressed concern over the level of student loan debt and is starting to pay attention that this debt is putting a drag on the economy.

If consumerism is the heart of the American economic engine, you can only imagine what can happen when people stop spending and start devoting more of their income to making student loan payments.

At a recent meeting of the Federal Reserve Open Market Committee the impression was, "Consumer credit sustained its moderate expansion in December and January. Nonrevolving credit continued to increase at a solid pace because of growth in student and auto loans, while revolving credit was roughly flat."

The Fed also said, "Both fiscal restraint and the high level of student debt were mentioned as risks to aggregate household spending over the forecast period."

If this was a good news / bad news situation at least we can find some comfort that federal backed student loans do have some reasonable programs to deal with the exploding burden of student loan debt. Private student loans on the other hand still do not have an opportunity at income based repayment plans or as many programs to discharge student loan debt completely.

For more information on dealing with student loan payments, see The Ultimate Guide to Dealing With Student Loans You Can't Afford.

And student loan debt is not just the burden of 20-30 somethings. Americans age 60 and older owe roughly $43 billion in student loan debt and more than 10% are 90 days or more delinquent.

On top of this, more older American's are finding their Social Security checks garnished for delinquent student loans they either took out later in life or cosigned for the kids or grandkids. - Source

Don't let student loans lull you into think they are good debt. They can reach up and ruin your life just like any other type of financial obligation.

Lately I've had more people writing to me they are actually contemplating suicide or leaving the country because of their struggle to live and meet their student loan obligations.

It's getting tough out here.

Big Hug!

Get Out of Debt Guy - Twitter, G+, Facebook

If you have a credit or debt question you'd like to ask just use the online form. I'm happy to help you totally for free.

If you'd like to stay posted on all the latest get out of debt news and scam alerts, subscribe to my free newsletter.