NY Fed Team Tackles Student Loan Debt Impact

Student loan debt remains a pressing concern in the U.S. because of high balances and high rates of delinquencies and defaults. The issues have been discussed in recent blog posts by the Federal Reserve Bank of New York’s Liberty Street Economics team. 

Recently, that team tackled the subject of whether former students are able to pay off their debts. The issue is critical because delays in repaying lead to higher interest charges and greater life consequences - such as putting off home buying and future large purchases that help drive the economy. Longer repayment periods mean that a large number of young adults can face widespread delinquency problems for many years, even if they ultimately qualify for some debt forgiveness.  The Liberty Street team used the Consumer Credit Panel based on Equifax data in their recent post on student loan defaults. The post reviews repayment rates, among other points covered.The blog series started with a discussion of the value of a college degree. The team's further analysis did not undermine the strong case for completing a college degree. Rather, the evidence gathered suggests that the way society finances those degrees - with an increasing dependence on debt held by students - has costs to both borrowers and lenders that are becoming more apparent.   The team behind the blog series includes: Meta Brown, senior economist in the Federal Reserve bank of New York's Research and Statistics Group; Andrew Haughwout and Wilbert van der Klaauw, both senior vice presidents in the group; Donghoon Lee, research office in the group; and Joelle Scally, administrator of the Center for Microeconomic Data in the group.  Click here for the full blog post.