Total student debt has nearly tripled over the past eight years, a new report from the New York Federal Reserve has found.
Total student debt stands at $966 billion as of the fourth quarter of 2012, the N.Y. Fed said in press materials, with a 70 percent increase in both the number of borrowers and the average balance per person. The overall number of borrowers past due on their student loan payments has also grown, from under 10 percent in 2004 to 17 percent in 2012.
It might be easy to hit on the HuffPost, but the information came from the New York Federal Reserve. That gives it a lot of credibility.
It also points to a lot of concerns that are going to be related.
Fewer people with student loans are buying homes, according to data in the report. Of borrowers ages 25 to 30 who are taking out new mortgages, the percentage of those with student debt has fallen by half, from nearly 9 percent in 2005 to just above 4 percent in 2012.
When you exclude the insanity (and fraud) of the housing bubble there has been an intelligent progress of home ownership for college grads. Starter homes were a responsible first step, moving up periodically when kids (and salary increases) arrived.
The games related to student loans has cut over half of those graduates from that normal consumer pattern.
"I don't like to use the word 'crisis,' because it's a 'crisis' that really can't melt down the same way that the mortgage market did," Chopra said on HuffPost Live. "In fact, a lot of the student loan issues are just going to be a drag on the economy, because young people aren't going to be able to participate like a generation ago when they're making very large payments out of their salaries every single month instead of putting it to better use."
That pretty well points to a deteriorated economy in the future.
With interest rates so low these days it is, I believe, in our interest to allow students and graduates to refinance their loans under the new system. That puts cash into the local economies as soon as the loans are refinanced and the payments are lowered.
Putting that increased cash into the economy can only help. The financial sector would fight that - they are getting super cheap money and are making a killing off of those under the old loan system. Personally I'll go for helping grads, the housing markets and the local economies over the financial sector.
The fed's report comes less than 24 hours before the federal sequester is scheduled to take effect, the automatic budget cuts that will cut off federal financial aid for as many as 280,000 students nationwide.
My bet is that won't matter. The financial sector has the money for lobbyists to keep those loans active. With billions going out in annual bonuses.