Student loan debt, now at $1.3 trillion, spells bad news for car sales

Student loan debt -- now at more than $1.3 trillion -- could soon have an adverse effect on U.S. new-vehicle sales, according to a Moody’s Investor Service analyst.Charles O’Shea, vice president and lead retail analyst at Moody’s, said rising student loan debt could negatively affect the health of U.S. retail as younger buyers, typically the largest drivers of retail growth, cut back on spending to pay off their debt.He said new-vehicle sales, which reached a record 17.5 million units in 2015, will be hurt by the student loan debt crisis as consumer demand for cars eventually eases.“At some point, that demand is going to slack,” O’Shea said Tuesday on CNBC. “And the fill-in demand, which would be the younger people moving up through the food chain, they’re not going to be there. They’re not going to have the money.”O’Shea said the $1.3 trillion student loan debt is up from $600 billion just “five or six years” ago. Moody’s found that consumers are expected to pay about $160 billion this year in student loan payments, more than the combined annual revenue of Home Depot and Lowe’s.While cautioning that Moody’s did not set out to offer any solutions to the student loan debt crisis, he said students and their families could benefit long term by viewing higher education as “more of a retail-oriented decision,” entailing, for example, attending a lower-cost community college for two years before moving to a four-year university.“Maybe families just need to spend less on the education part of it and leverage it and make it more of a retail slash economic decision,” O’Shea said.

Student loan debt, now at $1.3 trillion, spells bad news for car sales

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