BLOOMBERG: Daniel Acker/Bloomberg Five Things You Need to Know About Student Loans

Career College Central Summary:

  • Student loan debt has become a big economic concern, voiced by policy makers from presidents at the Federal Reserve's regional banks to the Treasury Borrowing Advisory Committee. They and other economists worry it's causing millennials to delay household formation and home purchases, which minimizes the boost to growth from such a large, young population. Here are five things any economy-watcher ought to know about the state of U.S. student debt. 
  • Total student debt has skyrocketed 
  • No question about it: The nation's overall student loan balance is way up, having risen steadily through the financial crisis even as other types of debt declined. This New York Fed study does a good job of explaining it. Today, about $1.2 trillion of student debt is outstanding, and delinquencies have defied the downward trend exhibited by other types of borrowing. As you can see in the chart below, the debt load has increased across the board, though it's heaviest for the under-40 age group. 
  • Even so, individual debt may start falling 
  • On the bright side, average annual borrowing per student has been declining since academic year 2010-2011, based on a research report from the Urban Institute in Washington released Monday. 
  • "There are a number of potential explanations" for why that might be happening, said Sandy Baum, a senior fellow at Urban. For one thing, parents may be doing better in the labor market, making it easier for them to pay for their kids' schooling. What's more, for-profit and law school enrollment has been declining, and both of those types of education are costly. 
  • "If this trend continues, the cumulative debt of graduates will eventually start to decline," according to the report and based on data from the not-for-profit College Board. The authors also hold out the possibility that the decline could reverse, and many students who borrowed in peak years are still in school, meaning their burdens will likely still be high upon graduation.

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