Skip to comments.Student Debt Rises by 8% as College Tuitions Climb (Compared to last year)
Posted on 05/31/2012 4:51:32 PM PDT by SeekAndFind
Americans are borrowing more to pay for college while reducing other debt as a weak job market prompts more people to go to school and tuition keeps climbing, new Federal Reserve Bank of New York data show.
Americans owed $904 billion in student loans at the end of March, nearly 8% more than a year ago, the New York Fed said Thursday in a quarterly report on consumer credit. That compares with the $679 billion they owed on credit cards at the end of the first quarter.
Between the fourth quarter of 2008, when credit-card debt peaked, and the first quarter of 2012, this borrowing fell by $187 billion, or 21.6%, the Fed said. Over the same period, student-loan debt rose by 41.4%, or $264 billion.
Americans are reducing their overall debt burden, a process known as deleveraging that began with the financial crisis. Total household debtincluding mortgage, student, credit-card and auto loanshas fallen by roughly 10% since borrowing peaked in mid-2008. It stood at $11.44 trillion as of March 31, the New York Fed said.
Mortgage borrowing is down significantly, the consequence of foreclosures, falling home values, tighter lending standards and weak home sales.
But student debt is quickly rising, in part due to higher tuitions, but also because alternative ways of paying for collegesuch as home-equity loanshave dried up. The Obama administration has expanded federal loan programs, which offer student loans at below-market rates. And, as usually happens in recession, college enrollments have surged as job openings have been scarce.
Educated workers, on average, earn more than workers with less education and college grads are much more likely to have jobs than those without college degrees.
(Excerpt) Read more at online.wsj.com ...
The New York Fed also released historical student loans figures, by quarter, dating back to the first quarter of 2003 as part of this quarters report. These data show that student loan debt has substantially increased since 2003, growing $663 billion. Outstanding student loan debt surpassed credit card debt as the second highest form of consumer debt in the second quarter of 2010.
Student loan debt continues to grow even as consumers reduce mortgage debt and credit card balances, said Donghoon Lee, senior economist at the New York Fed. It remains the only form of consumer debt to substantially increase since the peak of household debt in late 2008.
Additionally, 90+ day delinquency rates for student loans steadily increased from 6.13 percent in the first quarter of 2003 to its current level of 8.69 percent. They remain higher than that of mortgages, auto loans and home equity lines of credit (HELOC).
Is it any wonder the youth are disillusioned as they become the new middle class, with little opportunity and instead of a mortgage, a huge student loan around their necks? Perhaps all those calling for a housing bottom should consider who the bottom of the rung first-time homeowner is and how much more debt they are starting with now before calling the 'all-clear'.
So we have created an entire generation of kids who can’t do simple math AND don’t understand what is a “promise to repay.”
I have a nephew who keeps mewing about student debt forgiveness.
Fine: let’s do it retroactively to the late 1970’s. And I go first.
Also, the forgivees have to materially demonstrate how their degree is contributing to society. Flipping burgers at the local Wendy’s is NOT contributing to return our theoretical and practical contribution.
What good is it to pay 110K for a college education when all you get is a degree in multicultural studies.
You could’ve gotten a degree in chemical engineering for the same amount of money.
why is this important?....because the freaking schools and banks would stop lending to every tom, dick, and harry who thinks they can go to college to party....
only serious students and only serious subjects....
>>why isn’t student loan debt bankruptable?<<
Government debt is usually not subject to bankruptcy — else everyone would BK on their taxes and the government would have no funding at all.
If kids knew they could BK their way out of student loan debt then that would be their plan (as I said, it was my nephew’s plan anyway).
How can you objectively gauge a 17-YO’s ability to pay. They are ALL Tom, Dick and Harrys. And don’t ask the parents ot get involved — I was financially independent at 17.
And I paid my loans back but mostly made it through school via scholarships (I am a pretty good test taker).