A must-read on student debt from the NY Federal Reserve

Donghoon Lee of the New York Federal Reserve is the author of a recent research summary outlining the current state of student debt in the United States.  You can find the report in its entirety here:

http://newyorkfed.org/newsevents/mediaadvisory/2013/Lee022813.pdf

The research shows what we all know: student loans outstanding are growing, and the growth is not slowing down.  Here are a few takeaways:

1) Coming out of the recession, Americans pared back all non-mortgage debt except for student loans, which grew steadily and now represent the largest portion of non-mortgage consumer debt:

sld12) More and more young people are carrying student loans:

sld23) Student loan delinquencies are on the rise:

sld34) As a result, more young people are delaying the purchase of a home as indicated by fewer mortgage originations:

sld45) Growing demand for higher education likely comes down to a simple explanation: better career prospects, lower unemployment and higher average earnings than non-college graduates.

sld5Until some time where the risk and burden of student loans overcomes the dramatically better earnings potential, it is difficult to imagine this trend slowing.

 

 

 

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