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Student loans surpass auto, credit card debt

Dave_BerryDave_Berry CC Admissions Expert Posts: 2,335 Senior Member
edited March 2012 in Parents Forum
"Americans owe more on their student loans than on their credit cards or car loans, according to a new report from the Federal Reserve Bank of New York.

Student loan debt stands at $870 billion nationally, surpassing the nation’s outstanding balance on auto loans ($730 billion) and credit cards ($693 billion), according to Grading Student Loans, which is not a formal report so much as a scholarly blog post published by the economists at the New York Fed.

It comes at a time of heightened awareness of the student debt crunch. Last fall, President Obama took executive action to cap monthly loan payments at 10 percent of discretionary income, down from 15 percent previously. Obama has challenged colleges to help students manage their debt by keeping costs down.

One-third of the national student-loan balance is held by people ages 30 to 39, and another third by people older than that, signifying that only a small share of college graduates manage to retire their loan debt while still in their 20s. ..."

When will it also exceed mortgage debt?

Student loans surpass auto, credit card debt - College, Inc. - The Washington Post
Post edited by Dave_Berry on

Replies to: Student loans surpass auto, credit card debt

  • poetgrlpoetgrl Registered User Posts: 13,334 Senior Member
    When will it also exceed mortgage debt?

    Probably soon, since the debt level the kids are graduating with is so high, now, that it precludes buying a house, anyway.

    I've said this before, but it bears repeating, we are frontloading our young people with such high debt, at this point in time, in a way NO other generation has ever faced, and we should not expect to be the "consumer" economy we were during the years when the baby boomers were entering the workforce and moving up.

    It's very unfortunate the legacy we seem to be giving our children.
  • kelsmomkelsmom Super Moderator Posts: 14,553 Super Moderator
    Parents who never said no to their own desires are finding it hard to say no to what their kids want in terms of college. In addition, parents who were never able to give their kids what they wanted, want to give them college - the kids worked hard, and the parents are willing to sacrifice to help them attend a school they like.

    We have to learn to say NO to paying more for school than we can comfortably afford. Period.
  • thumper1thumper1 Registered User Posts: 63,864 Senior Member
    Americans owe more on their student loans than on their credit cards or car loans, according to a new report from the Federal Reserve Bank of New York.

    Is this supposed to be a surprise? One year of college costs at a 4 year public university (room/board/tuition/fees) is about the same as the cost of a new car in many places.
  • MD MomMD Mom Registered User Posts: 6,728 Senior Member
    Another thread where we need a "like" button!
  • JimboSteveJimboSteve Registered User Posts: 834 Member
    If I had to take out a loan to afford college, I wouldn't go. I'm very happy that some schools make the effort to be affordable to people from all socioeconomic backgrounds.
  • JimboSteveJimboSteve Registered User Posts: 834 Member
    Who wants to bet that, in 5 or so years, after another "shocking" debt devaluation, we'll all be talking about evil college loan bankers? These lenders are so selfish, man... we've got to make a fundamental transformation away from control by greedy capitalists, man.
  • Frances14Frances14 Registered User Posts: 5 New Member
    I see a big difference between borrowing for college and borrowing to buy a car or paying interest on a credit card. At least with education, it's possible to see a return on your investment, if the borrowing is done wisely. In our late 30s, we borrowed close to $50K over four years to pay the tuition for my husband to get a professional degree in a healthcare field. Between student loan forgiveness from his new employer and his 200% salary increase, we've almost paid it off less than three years later. We've never taken out an auto loan or paid a penny in credit card interest, but didn't hesitate to borrow for his education because we knew the earning potential.
  • RacinReaverRacinReaver Registered User Posts: 6,608 Senior Member
    Student loan debt seems like a much better investment than credit card debt.
  • BUandBC82BUandBC82 Registered User Posts: 2,061 Senior Member
    A few years ago my husband and I were sitting at the lawyers office to sign the papers to refinance our house. The lawyer held up a piece of paper with the amount of one of our monthly payments and told us he didn't see the property listed anywhere for that particular payment. My H and I both started laughing. It was H's med school loan payment, which sadly was high enough to be another mortgage payment.
  • bamboobangabamboobanga Registered User Posts: 18 New Member
    It's not unlike borrowing money to buy stocks.
  • vocemomvocemom Registered User Posts: 55 Junior Member
  • NewHope33NewHope33 Registered User Posts: 6,208 Senior Member
    "If I had to take out a loan to afford college, I wouldn't go."

    This got me thinking about my own experience ... after the dinosaurs died out but before Ma Bell had competition. I went to college on GI Bill money. With good planning backed by incredible luck, I spent my last available GI Bill dollar just before Graduation. My out-of-pocket? $150 ... plus eight years of my life of course (four for college plus four in the service). I wonder if, as a 17-year-old, I'd have had enough confidence in myself to sign off on a 30-year loan to finance a four-year degree. As I'm sitting here typing this, I'm thinking "No."
  • SteveMASteveMA Registered User Posts: 6,079 Senior Member
    I suppose you could twist this any way you want but given that the average student loan debt across the nation is around $25K, it isn't surprising that that figure is higher than credit card debt or auto loans. The average student loan debt in relation to starting salaries out of college has remained pretty much the same in the past decades.

    Student loan: a dowry in reverse? - May. 2, 2006 shows the average student loan debt in the 90's of $15K and change. http://www.postsecondary.org/last12/401095Salary.pdf Shows average starting salary in the mid 90's of about $30K (so roughly double).

    Today, that loan amount is about 25K and starting salaries are roughly 50K. Starting salary offers to Class of 2010 college graduates | The Professional Engineer

    Average student loan debt tops $25,000 - Nov. 3, 2011
  • fendergirlfendergirl Registered User Posts: 4,694 Senior Member
    i was just going to say what stevema said... this isn't surprising. I graduated college about 15k or so in student loan debt, 0 credit card debt, and at the time I owed about 6k on the car i purchased during school. I paid off that car within a year of starting my first job. Fast forward 7 years and I've paid off about 5k or so of my student loan debt, still have 0 credit card debt, and i no longer have that old car but recently purchased a new one and owe about 9k on it at the moment. So I still owe more in student loan debt. I have no rush to pay off either of those loans as they are only about 2 percent interest. My house on the other hand i owe 120k on. Contemplating refinancing to get a lower interest rate then the 5% I have now but not 100% sure yet.
  • SteveMASteveMA Registered User Posts: 6,079 Senior Member
    fendergirl--unless you are moving in 4 or 5 years or less--do the refi. Your home mortgage will be about what your student loans are :). I agree, why pay off a loan early that is at 2%? Even in conservative investments you can earn more than that...
This discussion has been closed.