A new report released by the Federal Reserve Bank of New York (FRBN) contains some pretty grim numbers. Here are some highlights:
- About 40% of Americans under 30 have outstanding student loan debt. That number is about 15% for all American adults.
- The average amount owed is about $23,000 and more than half of those with student loan debt–about 57%–owe more than $10,000. Current students will graduate with an average of $26,000.
- While previous reports had loan default rates at a rather conservative 9%, FRNB notes that these estimates do not account for the fact that roughly 47% of student loan borrowers are in deferral or forbearance–meaning their loans have not yet come due, either because they are still in school, still within the post-graduation grace period, or for some other reason.
- When the researchers looked only at those borrowers currently in the “repayment cycle”, they found that 27%–over a quarter of student loan borrowers–are late on their payments. (A loan is technically in default when no payment is made for 270-360 days.)
Additionally, while this report does not do a demographic breakdown, it’s important to note that we know from previous studies that these dynamics hit underprivileged communities the hardest, as students of color and first-generation college students on average take on more debt, earn less upon graduation, and thus default at higher rates.
As debts and defaults balloon, this system looks more and more like debt peonage. It’s time to rethink student debt.