The Economics of Student Debt

Tonight I will be presenting a lecture at Penn State University on the economics of student debt. The present state of student debt is not a pretty picture. According to a report published by the New York Federal Reserve Bank, college students are borrowing more than ever and debt delinquency is on the rise.

Student Debt almost tripled between 2004 and 2012 and stood at $966 billion at the end of 2012. In fact, student debt is the only kind of household debt to rise during the Great Recession and is now second only to mortgage debt in magnitude. Since 2004 there had been a 70% increase in the number of borrowers and a 70% increase average balance per person.

At the same time, for all age groups the share of borrowers who are more than 90 days delinquent on their student loan repayment has almost doubled.