Student Loan Debt Hits $1 Trillion
March 23, 2012
A new high-water mark for outstanding student loan debt has washed over the heads of young people looking to establish careers and older workers seeking retraining. According to a study conducted by the Consumer Financial Protection Bureau (CFPB), that mark hit $1 trillion at the end of 2011.
Rohit Chopra, the bureau’s student loan ombudsman, released the findings this week during a Consumer Bankers Association meeting in Austin, Texas.
“The lines of job-seekers are long, states are reducing their higher education budgets, and household budgets are straining,” wrote Chopra in a posting excerpted from the speech. “Young consumers are shouldering much of the punishment in the form of substantial student loan bills for doing exactly what they were told would be the key to a better life.”
In 2011, students borrowed $117 billion in federal loans alone. In total, federal and private student loans reached $1 trillion earlier than expected. Americans owe more money in student loans than on credit card debt.
The ripples may affect other aspects of the economy, including the recovery of the housing market and overall borrowing capacity for individuals and the government sector, noted Chopra.
In the long run, students working their way out of debt may hit key milestones, such as buying a house, getting married, and saving for retirement, at a later age. New graduates are also struggling with limited job opportunities post-graduation.
The CFPB plans to release a full report of its findings this summer and is working with the Department of Education to help students understand debt related to education.
“Too much debt means too much risk for a generation of young people,” said Chopra, “many of whom are struggling in today’s economy.”