Student Debt Perspective

Another Look at Student Debt

Special Commentary
by Wells Fargo Securities

Dec. 17: Fears that student-loan debt has crippled the finances of young households have intensified since the Great Recession. The rapid increase in educational debt, estimated at $1.2 trillion, has been pointed to as one factor holding back consumer spending and limiting the ability of Millennials to participate in the housing-market recovery. But are Millennials’ finances as dire as they are often portrayed?

To evaluate the financial position of Millennials, we use data from the Federal Reserve’s triennial Survey of Consumer Finances (SCF). Net worth among young households—not unlike their middle-age counterparts—has deteriorated in recent years. Two major trends, not entirely distinct, account for the decline: the rise in student-loan debt and the decline in residential real estate holdings. However, since a balance-sheet framework captures the liabilities incurred from student loans, but not the asset, we view debt-to-income payments as more telling of the financial burdens incurred from student loans.

We find that young households’ student-loan burdens, while growing, still look quite manageable given longer repayment terms and lower interest rates. That said, longer repayment terms mean Millennials will have to grapple with student-loan payments later into life, while there are also troubling signs that a rising share of college graduates aren’t making any payments.
—Sarah House, Erik Nelson

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High Debt = Low Default?

Borrowers with low post completion debt after they complete their education often have a higher rate of delinquency and default than borrowers with higher loan amounts and the trend is occurring across geographic areas in the U.S., according to new findings in “Mapping Student Debt” by the Washington Center for Equitable Growth with Generation Progress and Higher Ed, Not Debt.

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Interactive Map Showing

A new interactive student debt map shows those living in low-income communities with low student loan balances are having a harder time repaying their debt than those carrying six-figure student debts and living in wealthier areas….read more here.

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DPI at FSA Training

Great to see our clients at Las Vegas FSA training. Never stop learning!!

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Federal Student Aid Fall Training Las Vegas

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British Students face 60% Tax Rate

Think American student loan borrowers have it tuff? British student loan borrowers who use student loans to fund two degrees will see income tax rates of up to sixty percent … read more here….

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Costs Add Up for U.S. Student-Loan Forgiveness Program- The Wall Street Journal.

Costs Add Up for U.S. Student-Loan Forgiveness Program http://www.wsj.com/articles/u-s-student-loan-program-proves-costly-1448042862

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