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Student Debt Rises 8% to $904 Billion

Student Debt Rises 8% to $904 Billion
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New figures from the Federal Reserve Bank of New York show that student loan debt has risen 8% from a year ago. Americans owed $904 billion in student loans at the end of March, as compared with the $679 billion they owed in credit card debt.

Overall, Americans are reducing their debt burden in a process called deleveraging: The Wall Street Journal says that total household debt, which includes mortgage, student, credit-card and auto loans, has declined by about 10% since mid-2008 when borrowing reached its height. As of March 31, total household debt was $11.44 trillion.

But student debt is going up, and quickly,

…in part due to higher tuitions, but also because alternative ways of paying for college—such as home-equity loans—have dried up. The Obama administration has expanded federal loan programs, which offer student loans at below-market rates. And, as usually happens in recession, college enrollments have surged as job openings have been scarce.

The Wall Street Journal also reports that more students are falling behind on their payments. Economists point out that this trend portends poorly for the future, as people postpone buying houses and starting families:

A rising number of student borrowers are behind on their payments; 9% of the total dollar amount of student loans is 90 days or more behind on a payment. Many new graduates are having trouble finding well-paying jobs even as payments come due, and a growing number of students are dropping out of school, meaning they are left with debts but no degree, recent research shows.

One student noted by the Wall Street Journal, 19-year-old Juan Urias, left a private institution, St. Joseph’s College in New York City, to transfer to LaGuardia Community College, where tuition is far cheaper. Financial aid now covers all of his tuition; had he stayed at the other school, he would have had to borrow about $5,000 and graduated (provided that he was able to finish in four years) with $20,000 in debt. “I know how bad it is going to be in the future. I can’t do it,” he says.

I teach at a small Jesuit college in Jersey City, New Jersey, that is similar to similar to St. Joseph’s: Small private nonprofit schools whose student bodies are from lower-income backgrounds have simply become too expensive compared to community colleges and what such private schools might offer — more attention to students, smaller classes — has become a disposable luxury.

Could college as we have known it become such a luxury?

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27 comments

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4:18AM PDT on May 13, 2013

Great article. Thanks for sharing.

5:17PM PDT on Jun 4, 2012

Kasia says: "We're being left behind because of religious conservatives who simply want all the money that's left to themselves. Lets put these people in prison and run the country properly."

Kasia, what ever lead you to believe that we don't have free college because of religious conservatives???? I am an agnostic, so I don't care about religious conservatives, but I don't like to see anyone accused of something they are not responsible for.

Yes, many European countries have free college and free healthcare too, but they also have 50-60% income taxes to pay for it. Young people and many not so young don't seem to realize that NOTHING IS FREE. Someone has to pay for it. I am retired, so I shouldn't even care, but do you as a young person want to give up more than half of your weekly pay so that others can go to school for free? If you do, then knock your socks off and enjoy because that's where we are headed anyway.

3:14PM PDT on Jun 4, 2012

The college of the future will have no physical structures, and all classes will be on-line. The current campus and classroom model cannot be financially maintained.

2:26PM PDT on Jun 4, 2012

Maybe it's time for free university education for students. It's been highly successful in Europe and it's a large part of why China and India and other parts of South East Asia are taking our jobs: they have better educated people because the governments there have free education for those smart enough to go.

We're being left behind because of religious conservatives who simply want all the money that's left to themselves. Lets put these people in prison and run the country properly.

8:28AM PDT on Jun 4, 2012

Maybe it's time for a resurgence in Night Schools; yes, it will take longer to gain your qualification, but if you're working during the day and studying in the evening, you can avoid the huge debt burden - that's of course if you're lucky enough to find a job in the first place.......

3:28AM PDT on Jun 4, 2012

Thanks.

4:28PM PDT on Jun 3, 2012

More to come if Romeny wins and it will not just be student loans

5:58PM PDT on Jun 2, 2012

Gee, maybe we could . . . I don't know . . . get the governement out of it?

4:50PM PDT on Jun 2, 2012

Thanks for posting!

2:33PM PDT on Jun 2, 2012

@ Kasia Y. “These people are going to fill the essential instutions in our nation” Robert K is correct. Education is not a right. We only have such rights as our culture agrees that we have. I wonder what essential institutions you are referring to ? If you can find any essential ones, people that have shown fitness should be provided the necessary education to fulfill them at public expense. I assume that you are not referring to corporate institutions. They are able to fund any additions to their ranks. Concerning competition, the Chinese are clever enough to gain access to ALL results of US research and development, so success in those fields will be of no competitive help, but only a futile expense.




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