The Financial Services Roundtable recently released another iteration of its Fast Facts, reliable, bullet-point research about issues facing the financial services industry. Topics span TARP, Dodd-Frank, insurance, lending, retirement savings and more. Below are some updated Fast Facts on student loans, which are the largest form of consumer debt outside of home mortgages.
FACT: More Americans are attending college at a time when college is getting more expensive.
- Total college enrollment has increased 50% in the last 15 years.
- College costs are increasing at double the rate of inflation. Last year, tuition and fees grew 8.3% for in-state students at 4-year public schools, whereas the Consumer Price Index increased 3.6% between July 2010-July 2011.
FACT: Many students borrow money to pay for a college degree.
- According to the College Board, 57% of bachelor’s degree recipients at public institutions borrow money to pay for college.
- The average outstanding student loan debt was $23,300 in 2011, with 10% of borrowers owing more than $54,000 and 3% owing more than $100,000, according to the Federal Reserve Bank of New York.
FACT: Student loans are now the largest form of consumer debt outside of home mortgages, eclipsing both auto loans and credit cards, according to the Federal Reserve Bank of New York.
FACT: The vast majority of student loans are federal loans.
- At the end of fiscal year 2012, $931 billion of federal student loans were outstanding.
- In comparison, $140 billion of private student loans were outstanding last year.
- 93% of all new student loans were issued by the federal government in the academic year 2011-2012.
FACT: Private student loans often supplement federal borrowing to help families pay for the higher cost college of their choice.
- Families who used private education loans spent $29,940 on average for college in 2011-2012, compared to $19,650 by those who did not use private loans.
FACT: Private student loans have a significantly lower default rate than federal student loans.
- The total default rate for private student loans is 4.2%, according to Moody’s.
- Within the first three years of repayment, 13.4% of borrowers default on federal student loans, according to the U.S. Department of Education.
FACT: The federal government can recover defaulted student loans through administrative wage garnishment, offsetting federal tax refunds, and even part of Social Security checks.
- In contrast, private lenders may not use these methods to collect on education loans. Further, collections on private education loans are subject to statute of limitations; there is no statute of limitation on the collection of defaulted federal loans.
FACT: Seventy-two percent of college students who graduated between 2006 and 2011 report that they have paid off one-quarter or more of their college loans, according to the Center for Workforce Development.
FACT: On average, Americans with a college degree are twice as likely to be employed as the national average.
- According to the U.S. Department of Labor, unemployment for those with a bachelor’s degree and higher is 3.9%, compared the national average of 7.8%.
- An American with a bachelor’s degree can expect to earn more than $1 million more over their lifetime than someone who never went to college.
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