Yahoo! Finance features latest Millennial Student Debt report
As the Biden administration prepares to take office, mass cancellation of student debt becomes a more tangible policy option, leading to conflicting views from economists and experts. Marshall Steinbaum’s latest entry in the Millennial Student Debt project makes the case that student debt is a growing problem that even measures like income-driven repayment cannot fully address.
From the piece by Aarthi Swaminathan:
[Larry] Summers is correct in that relatively higher income Americans hold more student debt: The highest-income 40% of households (i.e., those with incomes above $74,000) owe about 60% of all outstanding debt. At the same time, however, lower-income borrowers bear bigger repayment burdens so any debt relief would directly benefit these borrowers.
Using demographic and economic data from the American Community Survey, Steinbaum found that over half the people who had taken out student loans in 2009 have yet to pay it all off. Looking deeper into zip codes, he found a major disparity between races: While more majority-minority neighborhoods had access to higher education because of student loans, their share of student debt has been steadily rising.
“We already have a great deal of student debt outstanding that isn’t being repaid and isn’t going to be repaid,” Steinbaum wrote in the recent Jain Institute report. And while this debt pile-up isn’t going to cause a macroeconomic crisis, he added, “that just means that you’re stuck in a debt overhang forever.”
View the article on Yahoo! Finance here.