The dramatic rise in student loan debt stems from the fact that parents of college-aged students are financially strapped and no longer able to help with tuition after losing thousands of dollars in household wealth, the National Association of Home Builders said.

"As more and more parents face tighter budget restraints as a result of lower home values, this is forcing an increasing number of students to take out loans for tuition, essentially shifting some of the burden of paying for college from parents to students," said Barry Rutenberg, chairman of the National Association of Home Builders said.

Federal Reserve data shows household wealth plunging 40% from 2007 to 2010 as values dropped.

"Together, these findings should serve as an urgent wake-up call for policymakers to do their part to ensure a full-fledged housing recovery moves forward to restore the balance sheets of tens of millions of home owning families, create jobs and spur economic growth," said Rutenberg.

The NAHB said it's calling on policymakers to begin focusing on a long-term economic recovery supported by reforms in appraisals and a federal backstop that will ensure the standard 30-year, fixed-rate mortgage remains to help families build stronger household wealth.

He added that Washington should be focused on providing access to mortgage credit for qualified borrowers and by demonstrating support for the mortgage interest deduction.