The cost of education is steep, and that factor is impacting the economy. Household debt is on the rise, but few realize student loans have become the second largest category of that debt, consuming much of borrower’s income and inhibiting ability to spend. With student loan debt steadily growing year after year, Credit Union National Association (CUNA) senior economist Jordan van Rijn addressed the issue in the November 2018 edition of the CUNA Economic Update.
“Tuition rates have been rising dramatically, well above the rate of inflation, and this is true for both private and public universities,” van Rijn noted in his presentation. “This may be partly due to the ease with which students can obtain government loans, which make up the vast majority of student lending.”
Van Rijn further elaborated on the causes of this rising source of debt, as well as delving into what this means for credit unions in terms of opportunities and potential challenges. Some key points include:
- The economy continues to grow and add jobs at a very fast pace.
- However, household debt is also rising, and student loans have become the second largest category of household debt.
- The average four-year college graduate now has about $30,000 in student loan debt.
- Student loan delinquencies are low, but many borrowers still struggle to pay their loans.
- Despite the rise in student loan debt, education remains a great investment.