At the University of Illinois Urbana-Champaign, “[more] than 50 percent of students…take out student loans to pay for school”.

This, coupled with the fact that more than 60% of graduates don’t have a full-time job, and you have a recipe for economic disaster.

As a result of no jobs and high debt, students are unable to make many of the purchases that “grown-ups” can, like cars and houses.

This, in turn, depresses those sectors of the economy, which rely on a yearly crop of eager graduates and newbies to the job market who are ready to invest in their future.

In the 1950s, “starter homes” were a hallmark purchase for young couples and graduates.

Now, it may be a decade before many graduates will be able to graduate from apartments to homes.

Student loan debt is increasing at record rates.

But the statistics are shocking when it comes to student loan debt and income.

A Pew Research study found that “those who graduated college without student loan debt have seven times the net worth, nearly $65,000, as those who have student loan debt, at $8,700.”

Remember—they graduated college and have the same education as those who graduated with student loan debt.

Worse, a corollary relationship between overall debt and student loan debt has been shown:

While the typical household that owes student loans has about $13,000 in outstanding debt, they have about $137,000 in total debt compared with the $73,000 in debt that college-educated households without student loans hold.

Student loans have become a habit for young people that doesn’t get broken later in life, leaving them poorer than their classmates who don’t take out student loans and more likely to accrue more debt.

The lifeblood of the American housing market is the first time buyer. Whether newlywed, just out of college, or looking to make that first big purchase, the first time buyer keeps houses affordable.

However, due to high student loan debt, young people have had to replace their typical first big purchase (homes) with another (education):

2012 was the first year in which young people with student debt had lower home ownership rates than people without student debt.

The impacted credit scores from high student loan debt also prevent first time buyers from getting mortgages.

When student loans get out of control, they don’t exist in a vacuum. They can create a ripple effect throughout the economy, and without a continual crop of young and eager home buyers, the housing market will have trouble making a full recovery.

When tuition rates were relatively reasonable for college, taking on a small amount of student loan debt was not a large problem. You worked for a few years, earned a higher income, paid off your loans, and enjoyed the benefits of higher education.

However, incomes have not kept up with rising school costs and student loan rates. Now you take on debt, struggle to find a job, find a job that barely pays the bills, and are saddled with debt for decades.

A new proposal is being floated to change the current loan system into an equity system, where investors would finance a student’s education for a percentage of their salary down the road.

In Oregon, the item is gaining traction:

It would eliminate up-front tuition payments and instead take a percentage of future income. Students in state-run colleges and universities would have their total tuition waived in exchange for a commitment to pay back the state about 3 percent of their income during their first 24 years of employment.

It’s good to see people taking a unique approach to tackling the debt crisis. The emphasis on getting a job after college, instead of the hope that will happen, may improve prospects and lower the onerous burden of paying off loans regardless of employment.