Friday, May 4, 2012

Too Big to Fail: Student debt hits a trillion

Recently, we undertook what we understand is the first major effort to understand the size of the private student loan market. This market went through the same boom and bust cycle we saw play out in markets for mortgages and other credit products.

Our initial findings on the size of the private student loan market are sobering. When we add in the outstanding debt in the federal student loan program, it appears that outstanding student loan debt hit the trillion dollar mark several months ago – much larger than estimates from other recent reports. It seems that this market is too big to fail.

Unlike other consumer credit products, student debt keeps growing at a steady clip. Students borrowed $117 billion in just federal student loans last year. And students continue to borrow private student loans, which lack the income-based repayment and deferment options of federal student loans. If current trends continue, there will be consequences not just for young people, but for all of us. Read more.....

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