U.S. student loan debt rose to a record $1.2 trillion for the first quarter ended March 31, following a $31 billion jump, the Federal Reserve Bank of New York reported.
Not including mortgages, student loan debt surpasses all other types of consumer credit - including credit card debt and auto loans. Student loan debt has soared in recent years even as total consumer debt is down from its peak in 2008.
Senate Democrats, aware of growing public concern over student loan debt, are making the topic one of their top election year pushes and expect to vote next month on legislation to allow for refinancing at lower rates.
Nearly 70% of debt belonging to 25-year-olds comes from their student loans, which continued to increase in 2013. The average student loan balance rose to $20,926, according to the Fed. Despite the growth of housing and auto sales in 2013, student borrowers lag in both purchases, New York Fed researchers reported.
The refinancing legislation, offered by Massachusetts Democrat Elizabeth Warren, would allow holders of public and private student loans to refinance at lower rates, just as people can refinance home mortgages or car loans.
This high amount of student debt is dragging down our economy, said Sen. Kirsten Gillibrand (D-N.Y.), who sponsored a provision in the loan legislation.
Republicans will likely balk at a provision in the bill that pays for the lost federal revenue from government loans by raising income taxes on those who earn more than a million a year.
But with President Obama expected to address the rising student loan debt in the coming weeks, bringing more national attention to the issue, the GOP will face growing political pressure to reach some sort of compromise.