So what slice got smaller? Mortgages. From 63 percent of total debt for 20-29-year-olds in 2005 to less than 43 percent.
The Consumer Financial Protection Bureau's newest report on the private student loan industry noted that the Treasury Department recently acknowledged that the student loan market could "significantly depress demand for mortgage credit and dampen consumption."
Could? The TransUnion data show the impact is clearly being felt already. You better believe that the debt load carried by millennials has a serious impact on your finances. Nearly 70 percent of our economy comes from consumer spending, yet there's a significant demographic that has a very limited ability to consume. Weak demand mutes economic growth, which we can all agree is not ideal.
Read More4 in 10 millennials overwhelmed by debt: study
While the private student loan industry is the baddest of the bad actors (just read the CFPB report), even the much fairer federal loan program is not without its serious warts. The sizable profit margin is in part fueled by too high interest rates. The interest rate on federal undergraduate loans this year is 4.66 percent. For graduate students, the rate is 6.2 percent. For parents borrowing through the PLUS program, it's 7.2 percent. That's just for this year; rates are now tied to the 10-year Treasury note rate, which will likely mean higher student loan rates in the coming years simply because we're still hovering near historic lows.
The 4.66 percent for an undergraduate Stafford loan is at a time when qualified borrowers can get a 30-year fixed rate mortgages for around 4.3 percent for much of the year. If banks can make plenty of money lending out at less than the rate on a federal student loan—for 30 years—it is troubling that student and their families are charged more for shorter-term debt.
And don't tell me that extra rate cushion is to pay for the risk of student loans that are essentially handed out without any qualifying standards. (PLUS borrowers just have to be current on debt payments and not filed for bankruptcy recently.) Homeowners can default on a mortgage and have it discharged in bankruptcy. As I mentioned earlier, student loan debt is not dischargeable in bankruptcy. That's a pretty low risk.
Sen. Elizabeth Warren, D-Mass., has introduced legislation that would allow student loan borrowers to refinance their loans at rates below 4 percent for undergrads and under 7 percent for PLUS loans; essentially rolling back rates to where they were before this academic year, when Congress instituted its new higher-rate regime and eliminated a lower subsidized rate on Stafford loans entirely. That's not a break for student loan borrowers. It's fair and equitable, and could help ease an economic headwind that impacts all of us. Yet the bill has to date met strong Republican resistance.