This Econbrowser update by Economics Professor James Hamilton on the nation’s record rise in student loans over the last half-decade or so is chock-full of all sorts of disturbing data, such as, the first chart that depicts the near doubling in outstanding student loans as a share of GDP from below 4 percent to over 7 percent.
There’s also a good discussion about how the Education Department gets borrowed money from the Treasury Department in order to lend that money to students, many of whom either don’t graduate or make much less after they get their sheepskin than they thought, making it difficult (if not impossible) to pay that money back.
It seems Education has become one Treasury’s better customers as illustrated below.
The stat of the day is this gem:
The outstanding balance borrowed by the Treasury on behalf of the Department of Education’s student loan programs comprises 7% of the $12 trillion in debt owed by the Treasury to the public as of the end of last fiscal year, and by itself accounts for 20% of the growth in Treasury debt during that fiscal year.
Of course, this isn’t going to end well – for students or the government.
In fact, it’s already not ending well as default rates are soaring and an entire generation is souring on the American dream that has turned into being saddled with debt for the foreseeable future in yet another legacy of the present era of easy money in the U.S.