The Homa Files

One of the byproducts of the recent college admissions scandal has been an elevated look at college attainment (i.e. what are students really learning) … and ballooning student debt.

Last week we looked at what students are really learning.

Now lets shift the spotlight to student debt.

First, some sobering statistics …

Student debt has more than tripled since 2004, and is now over $1.5 trillion — second only to mortgage debt — and higher than both credit cards and auto loans.

That’s a problem because (1) The student loans fuel tuition increases by enabling colleges to fund inefficiencies (2) Servicing the debt load constrains borrowers lifestyle choices (e.g. marriage, home buying) by crowding out other debt capacity, and (3) When interest rates rise (and, they eventually will) repayment will pose an increasingly difficult challenge for many (most?) borrowers.

Let’s drill down on that $1.5 trillion…

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The roughly $1.5 trillion in student debt is held by about 45 million former students.  That works out to about $33,000 per debt holder.

Let’s break that average down a bit further:

• Public Colleges: Roughly 2 of every 3 students graduating from a public college leaves with an outstanding loan averaging  $25,550.
•  Private Non-Profit Colleges: Roughly 75%students graduating from an NFP private college leaves with a student loan debt that is, on average, $32,300.
• For-Profit Colleges: Roughly 9 in 10 of students who attend  for-profit colleges leave with loans that are , on average, $39,950.These ‘for-profit’ borrowers are particularly problematic since they have the largest average debts and — by far — the highest default rates.

More on that tomorrow…

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This entry was posted on April 3, 2019 at 6:59 am and is filed under Student Loans. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.