$1 Trillion of Student Loan Debt

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.

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(wikipedia)

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.

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(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.

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(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.