The Global Financial Literacy Excellence Center at George Washington University School of Business in Washington, D.C., released a policy brief in November 2016 on student loan debt in the U.S. The study, compiled by authors Annamaria Lusardi, Carlo de Bassa Scheresberg and Noemi Oggero and with the support of the FINRA Investor Education Foundation, found that many borrowers struggle to make their student loan payments and would do things differently if they could go through the process of taking out a student loan again. With data from the FINRA Investor Education Foundation’s National Financial Capability Study, released in July 2016, the brief makes a compelling case that “student loan debt can impact borrowers’ financial decisions and the economy as a whole.” Below are some of the policy brief highlights. You can access the full report here.
- The number of student loan borrowers has almost doubled in the past 10 years, from 23 million to the current 43 million borrowers. And the amount of debt has increased from $240 billion at the start of 2003 to about $1.3 trillion as of March 2016.
- A report by the Federal Reserve Bank of New York (2014) found that student loans have the highest rate of delinquency out of all consumer debt products.
- More than half of student loan holders (54%) did not try to figure out how much their future monthly payments would be before taking on their loans, and a staggering 53% said that they would make a change if they could go through the process of taking out loans all over again.
- Of borrowers with payments due, only half (51%) said they have been on time with their payments. Meanwhile, nearly two in five (37%) have been behind on payments at least once in the past 12 months, and 25% have been late more than once
- Minorities (African Americans and Hispanics) and lower income respondents are more likely to be behind with payments.
- The brief concludes the following: “What makes the student loan situation especially concerning is borrowers’ difficulty with repayment and the potential for loan defaults and delinquencies, which have increased steadily since before the recession, to become commonplace.”