Here are three charts about student loans that have me worried. First, the total amount of student loans in the U.S. has risen steadily, doubling just since the financial crisis:
President Obama signed a presidential memorandum Tuesday directing federal agencies to overhaul the way Americans repay their student loans.
The move is the latest in a series of steps the administration has taken to promote college access and affordability, including expanding a program that caps student loan payments to 10 percent of a person’s income for 20 years.
Everyone knows the alarming news about student loans: It’s grown to become the second-largest source of consumer debt in the U.S. behind only home mortgages, surpassing credit card debt since the financial crisis.
A report from Goldman Sachs Group Inc (NYSE:GS) Research published on Friday, April 17th suggests that while the massive amount student loan debt is a real social and financial problem, even if default rates continue to grow as projected, it will have a notable impact on growth in the residential real estate market but not pose a major risk to the financial system as a whole.
Student loans, along with mortgages and car loans, have become one of the three largest sources of credit, exceeding credit-card debt. This growth in student debt appears to have caught regulators unprepared.
Has the student loan crisis already been solved?
This might seem an absurd question. Student loan debt is at a record high of $1.1 trillion, and the average undergraduate who borrows to attend school graduates nearly $30,000 in debt. Almost 20 percent of student borrowers are in default.
Only about 56% of borrowers are making payments. At the peak of the mortgage crisis, 10% fell behind on payments.
Let’s call her Alice. One of us has known her for years. She earned her Ph.D. in the mid-1990s when academic jobs were scarce, and she wound up an academic gypsy.
Total Student Loan Debt: $1 Trillion
Two-thirds, that’s right, two-thirds of students graduating from American colleges and universities are graduating with some level of debt. How much?
Borrowers with federal student loans, long promoted as the safest way to borrow for college, appear to be buckling under the weight of their debt, new data show.
Although the latest data from the Department of Education appears to indicate that the worst of the student loan crisis could be over, there’s still reason to believe that student loans will continue to threaten college graduates’ finances for years to come.
If one were to ask me what I think is the most dangerous threat to our economy, the answer is very simple: student loans.
For many families, April is the month that one of their college-bound members will hear the news that she/he has been accepted or rejected by one or several of America’s 4,700 institutions of higher education.
Among the many ideas being considered to ease the nation’s student loan debt crisis is this one: Allow cash-strapped borrowers to wipe out their repayment obligations through federal bankruptcy court.