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From Student Loans to Economic Growth

March 6, 2023

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From Student Loans to Economic Growth: The Power of Alternative Investments

A student at a graduation ceremony
How do student loans affect the economy? Photo by Juan Ramos on Unsplash

Student loans are on everyone’s minds this week following Biden’s relief plan.

So, this week we are going to give a brief explainer of the impact of student loans on the economy, and then point out how investing in alternative assets can help.

The impact of $1.7 trillion in debt

It’s no secret that student loans are a major financial burden for millions of Americans. According to the Federal Reserve, the total amount of student loan debt in the US currently stands at over $1.7 trillion. It’s a number too big to really comprehend.

This debt has far-reaching implications for the economy as a whole. For example:

  • Reduced consumer spending: If you have a lot of student loan debt, you are not likely to be able to make major purchases. This is especially true for big things like a house or a car. The overall effect on the economy is reduced consumer spending, which can have a downgrading ripple effect.
  • Lower economic growth: Student loan debt can also lead to lower economic growth because people are less likely to start businesses or invest in the stock market. This isn’t great for the economy and it isn’t great for individuals.
  • Delayed retirement: For a lot of people, student loan debt can delay retirement. This means that they are less likely to have the disposable income needed to invest in their later years. All of these points link to reduced spending and so reduced economic growth, as well as reduced quality of life.

Investing in alternative assets

Investing in alternative assets can bring about the opposite effect on student loan debt, and have a positive impact on the economy as a whole.

A graduate in a red cap and gown.
Investing can move you away from debt. Photo by Honey Yanibel Minaya Cruz on Unsplash

Simply, when you invest in businesses, private equity, or real estate, you are helping to create jobs and spur economic growth. When you invest, you are contributing to the overall health of the stock market, which benefits everyone.

This is especially obvious in the case of Merchant Cash Advances because you are literally investing in keeping a business open and operational, directly supporting real human jobs and productivity.

For those who are able to invest in alternative assets, it can be a powerful way to take control of your finances whilst also contributing to the overall health of the economy. A double win.

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