Another day, another record broken.
The debt held by US households has surpassed its pre-2008 record, several financial outlets note. A peculiar spotlight in the associated numbers falls on student loans [newyorkfed.org], where delinquencies are multiple times higher than for other debt types: 10 percent is the norm.
That's some pretty troubling news for the economy [and wider society], notes Rana Foroohar at sister outlet the Financial Times. First off, there's the association between the rise in student debt, and a decrease in home ownership for young people. This connection is exacerbated by them millennials increasingly turning towards income-based repayment programmes, which spread out the debt over more years.
Secondly, the level of student debt delinquencies ain't changing: the 10 percent figure is a near-constant over the past 4-5 years. People who've ever had a delinquency -- even if they recover -- have a much lower rate of home ownership at age 30 as compared to their non-defaulted compatriots. Not having a home means not filling it with stuff, and filling with stuff is kinda what the economy is based on.
Then, thirdly, it's not only students that are hit by student debt: increasingly, their parents are taking on debts too, to help out. Fuel for that debt sandwich is something peculiar: the rate of inflation in college admission costs is three times higher than the consumer price index. Must be that college professors wages have increased a lot [aaup.org], then.
Given that boomers and their millennial offspring are the two largest voting blocks in the US, a snappy future president-elect might consider raising the issue a bit.