Current State and Trend of Education Debt in USA

The 24-page Power Point report put out by New York Fed on Feb. 28, 2013 is truly amazing. If you have not read the report, you should.

It worth my while to take some notes here:

Page 2:

“Due to increasing enrollment and the rising cost of higher education, student loans play an increasingly important role in financing higher education.”

“However, the rapidly increasing burden of student debt, approaching $1 trillion now, including both federal and private student loans with very different characteristics.”

Page 5:

” Student debt is the only kind of household debt that continued to rise through the Great Recession and has now the second largest balance after mortgage debt.”

Page 7:

Number of borrowers and average balance per borrower each increased by 70% between 2004 and 2012. That is 7% per year. Now the nation has close to 40 million people owing student loan and average balance is about $25,000, hence the $1 Trillion. 

That  is $1,000,000,000,000, 1 followed by 12 0’s.

Page 8:

Now more than 42% of the nation’s 25-year-old’s have student loans.

Page 9 Summary:

Student Debt almost tripled between 2004 and 2012 and stands at $966B as of 2012:Q4

  • 70% Increase in the number of borrowers
  •  70% increase average balance per person

Reasons for the growth in borrowers and per-person debt:

  • More people attend college and graduate school
  • Parents take out student loans for their children
  • Students stay longer in college and more often attend graduate school
  •  Lower repayment rates as borrowers delay payments  through deferments and forbearances
  • Discharging student debt is very difficult and the balance stays with the borrower
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