Fact and fiction about student loans
Post updated, see below
USA Today’s Dennis Cauchon has a very odd story today, headlined “Student loans outstanding will exceed $1 trillion this year”:
The amount of student loans taken out last year crossed the $100 billion mark for the first time and total loans outstanding will exceed $1 trillion for the first time this year. Americans now owe more on student loans than on credit cards, reports the Federal Reserve Bank of New York.
Note Cauchon’s link, there — it’s meant to take you to the USA Today page for the New York Fed, although for me I just get a 404. What it doesn’t do is take you to the NY Fed’s own website, or give any indication of what data Cauchon thinks he’s using. Because, not to put too fine a point on it, Cauchon’s facts — including the headline on the piece — are simply not true. Here’s the NY Fed’s data, in Excel form, and here’s a chart I just put together, from the NY Fed data:
This chart shows the total stock of credit-card and student-loan debt, up to the second quarter of 2011. The most recent figures show total credit-card debt at $690 billion, and total student-loan debt at $550 billion.
It is not true that Americans now owe more on student loans than on credit cards, and total student-loan debt isn’t even close to $1 trillion.
Unfortunately, Cauchon’s article is seeping into the blogosphere: Suzy Khimm picked up on it today, and Kevin Drum and Eyder Peralta followed her lead, asking for “more analysis, please”. Which is always a good thing to ask for, when USA Today can’t get its facts straight.
As for what the real facts show, I think it’s pretty clear: the stock of student loans outstanding continues to increase at a pretty much the same pace it’s been rising at for the past six or seven years. It doesn’t seem to have accelerated with the rise of private-sector online universities, but at the same time it also shows few signs of declining along with credit-card and mortgage debt. And of course it’s also much harder to discharge than mortgage or credit-card debt. It’s a problem, I think. But it’s not a trillion-dollar problem, and it shows no sign of becoming a trillion-dollar problem any time soon.
Update: It turns out that the NY Fed data, which Cauchon cited, is wrong, and is about to be revised; when that happens the total amount of student loans will rise to more than the level of credit-card debt, but still less than $1 trillion. Details here.