Today I learned that student loans recently surpassed credit-cards to become the largest non-mortgage source of debt for US consumers. Not only that, in the next quarter or two, total outstanding debt will ominously hit 1 Trillion Dollars.
The remarkable thing about this is not just how big student loan debt is, but how much it has grown in the last few years.
(chart shamelessly stolen from alphaville)
Two things jump out at me:
1- while the other types of debt seem to be cyclical, student loan balances seem to have climbed at a pretty steady pace, in good times and bad.
2- in 8 years, student loans have almost quadrupled in size!
Obviously, some part of this is demographic: there have been more kids graduating as the ‘millenials’ grow up. But the change has been about 11% over the past 7 years.
(data from the NCES, complied by me)
The NY Fed has a helpful page on this as well.
So how much is $1 Trillion? it’s:
- over $3,000 per person in the US.
- about $25,000 per student with debt
- larger than the GDP of Indonesia
- larger than the entire construction industry’s impact on US GDP.
To be fair, I think much (certainly not all) student debt is warranted. Though being a lawyer isn’t what it once was, and there are smart people calling education a bubble, I know I got a lot out of university and I imagine most other people who went did as well.