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Recent college graduates who borrow are leaving school with an average of $34,000 in student loans. That's up from $20,000 just 10 years ago, according to a new analysis from the Federal Reserve Bank of New York.
In that report, out this week, the New York Fed took a careful look at the relationship between debt and homeownership. For people aged 30 to 36, the analysis shows having any student debt significantly hurts your chances of buying a home, compared to college graduates with no debt. The cliche of "good debt" notwithstanding, the consequences of borrowing are real, and they are lasting.
The report paints a mixed picture of how student borrowing has evolved over the last decade, since the financial crisis. There are some bright spots: For example, student loan defaults peaked five years ago and have declined ever since.
And repayment seems to have slowed down among high-balance borrowers —those who owe $75,000 or more. Meaning, after 10 years, they have paid down only one-quarter to one-third of what they owe.
On the face, this isn't necessarily good. But taken alongside the decline in defaults, Fed president William Dudley said in a press briefing Monday, it reflects something good. That is, graduate students, in particular, are signing up for government programs intended to help make payments more affordable.
Source: NPR
(Score: 1, Informative) by Anonymous Coward on Wednesday April 05 2017, @08:12AM
In my country - which many Americans would amusingly consider a Socialist paradise - many high level education paths are private. And yet, they're not very expensive. You can pay it back in less than two years with the expected salaries (yes, after living expenses), assuming you don't take any help or job before that.
Why? I'm not sure, but I'd wager because borrowing is actually rare and people watch out for the costs. They're not willing to pay for useless degrees. In addition, private schools are in many cases competing with government programs which are free (you actually have to pay for some stuff but it's usually 90% cheaper).
Don't blame American nonsense, especially debt addiction, on the "free market".