A Dubious Milestone: Student Loan Debt Tops $1 Trillion
Hopefully you knew student loan debt was a burgeoning crisis in this country. But did you know it was a $1 trillion (with a T) crisis? According to the CFPB, previous estimates of the student loan debt in America were far too low. The Wall Street Journalreports:
Total student debt outstanding appears to have surpassed $1 trillion late last year, said officials at the Consumer Financial Protection Bureau, a federal agency created in the wake of the financial crisis. That would be roughly 16% higher than an estimate earlier this year by the Federal Reserve Bank of New York.
The new figure—released Wednesday at a banking conference in Austin, Texas—is a preliminary finding from a study of student debt that the bureau plans to release this summer. Bureau officials said the estimate is based on a survey of private lenders, as opposed to other estimates that rely on a sampling of consumer credit reports.
CFPB officials say student debt is rising for several reasons, including a surge in Americans going to college in recent years to escape the weak labor market. Also, tuition increases—which many colleges say are needed to offset big cuts in state funding—have many students taking out bigger loans.
In addition, the interest costs on older loans are climbing as borrowers fall behind on payments, reflecting mounting financial strains, bureau officials said. New York Fed data show that as many as one in four student borrowers who have begun repaying their education debts are behind on payments.
As AlterNet's Sarah Jaffe has reported, the student debt crisis is a growing problem that Congress needs to address, lest it become even harder for students to get out of debt. Now we just know that the problem is even bigger than we thought.