Category Archives: student debt

6/4/19: Student Loans: The Bubble Is Still Inflating


A neat chart from Bloomberg summarizing the plight of student debt overhang in the U.S. economy:


In effect, education is the most leveraged, over the recent cycle, form of household investment out there. Second to it, is only investment in health. Via https://www.healthsystemtracker.org/chart-collection/u-s-spending-healthcare-changed-time/#item-total-health-expenditures-have-increased-substantially-over-the-past-several-decades_2017:


6/4/19: Student Loans: The Bubble Is Still Inflating


A neat chart from Bloomberg summarizing the plight of student debt overhang in the U.S. economy:


In effect, education is the most leveraged, over the recent cycle, form of household investment out there. Second to it, is only investment in health. Via https://www.healthsystemtracker.org/chart-collection/u-s-spending-healthcare-changed-time/#item-total-health-expenditures-have-increased-substantially-over-the-past-several-decades_2017:


9/1/19: Student Debt Bubble Adjusted for Wages and Employment Costs Growth


Student loans debt has been steadily rising in recent years, at rates far in excess of the rates of growth in overall credit to the U.S. households. However, the data shows conclusively, that the degree of leverage risk implied by growing student debt is now out of control. Here are two charts, referencing the levels of student debt to earnings and employment costs since 1Q 2005:
Source: Bloomberg

Source: my own calculations based on data from Fred database

In very simple terms, adjusting for labor compensation to college graduates, student debt growth rates since 1Q 2005 have exceeded the growth rates in returns to college degrees. The rate of this excess, cumulated from 2005-2006 period is around 2.5 times. In other words, student debt has grown 2.5 times more than the growth rate in college degree-holder's labour compensation.

9/1/19: Student Debt Bubble Adjusted for Wages and Employment Costs Growth


Student loans debt has been steadily rising in recent years, at rates far in excess of the rates of growth in overall credit to the U.S. households. However, the data shows conclusively, that the degree of leverage risk implied by growing student debt is now out of control. Here are two charts, referencing the levels of student debt to earnings and employment costs since 1Q 2005:
Source: Bloomberg

Source: my own calculations based on data from Fred database

In very simple terms, adjusting for labor compensation to college graduates, student debt growth rates since 1Q 2005 have exceeded the growth rates in returns to college degrees. The rate of this excess, cumulated from 2005-2006 period is around 2.5 times. In other words, student debt has grown 2.5 times more than the growth rate in college degree-holder's labour compensation.

16/11/18: Student Debt Hits Another High in 3Q 2018


Bloomberg @business just now posted that the student loans debt in the U.S. has increased USD37 billion to USD1.44 trillion at the end of 3Q 2018:


And, Flows of student debt into serious delinquency - 90 or more days - rose to 9.1% from 8.6% in 2Q.

This is somewhat at odds with the Fred database which shows Student Loans debt at USD1.5636 trillion in 3Q 2018, up ca USD33.23 billion on 2Q 2018:


While the NY Fed report is already alarming in both delinquencies rates dynamics and overall debt dynamics, the FRED data that includes securitized debt volumes is even more worrying.

By its very nature, student loans debt impacts the segment of the population (younger workers) who are in the need to fund their housing needs just as their careers are only starting (with associated lower earnings). These younger households also need financial resources to achieve sufficient mobility to better match jobs offers and career prospects to their abilities and needs. Student loans fall heavily onto the shoulders of younger families with growing housing needs, healthcare demand and funding calls from childcare. In other words, student loans debt is potentially crippling those households that are demographically going through the period when enhanced mobility and financial resilience are necessary to secure better life-cycle employment and family outcomes.