Americans are graduating from college today with mountains of debt that will take years to dig out from under.
Two-thirds of 2011 graduates of four-year colleges accumulated an average of $34,000 in debt each, according to FinAid.org - more than triple the amount of a 1992 graduate. For those who went on to medical or law school, the final cost could be 10 times that amount.
Until they get rid of the debt, "it is inconceivable that they'll ever be able to buy a home," said Steven M. Dunne, a Philadelphia consumer-bankruptcy lawyer who last year paid $36,000 to chip away at his student loans, $5,000 of that interest.
"When I graduated from law school, I knew I couldn't make the payments with one job," said Dunne, "so I've had two for the last three years.
"The impact is that I can't afford to buy a house or a car," he said. Essentially, "I have two mortgages to pay every month, but I don't have any real estate to show for it."
His friends and a huge number of his clients are in a similar position, thanks to skyrocketing educational costs - some attributed to workers seeking retraining as high-paying jobs are outsourced.
"In the last 20 years, tuition has risen 130 percent, four times the rate of inflation," Dunne said. "Private colleges typically cost $38,000 a year with room and board.
"It is putting the economy in a dangerous position, delaying life-cycle events like homeownership, marriage, and having children," he said.
The result has been fewer household formations, on which the demand for housing - both existing homes and new construction - depends.
With fewer first-time buyers in the pool, current owners who want to move cannot sell. With so many heavily indebted graduates moving back with their parents, people who thought they had emptied the nests cannot buy smaller houses.
"It boggles the mind how anyone can allow someone without a job to accumulate $200,000 in debt," said Mayfair real estate broker Christopher J. Artur, who spent much effort over the years ensuring that his children graduated from college debt-free.
Dunne, a 1999 Pennsylvania State University graduate who got his law degree from New England University School of Law in 2005, started his firm, Dunne Law Offices P.C., in 2009, "believing that I could help others even though I couldn't help myself."
Of the legions in precarious financial straits because of high debt levels, many in this area find themselves sitting across from Dunne after defaulting on student loans.
William E. Brewer Jr., president of the National Association of Consumer Bankruptcy Attorneys, said that the amount of student borrowing crossed the $100 billion threshold for the first time in 2010, and that total outstanding loans exceeded $1 trillion for the first time in 2011.
What's more, Dunne said, those who default on student-loan payments see their principal automatically increase 33 percent, so if you owed $100,000 and stopped paying, the balance goes to $133,000.
Part of the problem is that most students do not know what they are getting into.
The new Consumer Financial Protection Bureau is working on a one-page financial-aid shopping sheet (see it at http://consumerfinancial.gov) to help students figure out how much in federal loans and private loans they should consider taking on, and what kind of loan repayments will follow after graduation.
"They need to start teaching a course in high school about the hidden provisions of student loans and credit cards and how to make it financially in the world. It would be the most important class anyone ever took," Dunne said.
Many of these struggling graduates are employed, but they are not earning what some of the schools had promised. That's true in law schools especially, which promise 100 percent employment and starting salaries at $160,000, Dunne said.
"It is more like $50,000 to start," he said, noting that a class-action suit had been filed in New York against several law schools over claims of universal employment and six-figure starting salaries.
What Dunne can do for his clients is limited. The national bankruptcy attorneys' group said 82 percent of its members see little chance of discharging student-loan debt this way.
"Clients also read online that loans can be discharged under a hardship standard, but that's legal fiction," Dunne said.
"The banks got the laws changed in 2005, so that unless you are paralyzed or otherwise impaired, there's no chance," he said.