Student Loans In March 2012,
the Consumer Financial Protection Bureau issued a report on the subject of student loans that stated plainly, “it seems that this market is too big to fail.” A year and a half later, let’s check on the industry as a whole and the five biggest private lenders who participate in it. Source: CFPB
Industry Overview The size of
the student loan market has skyrocketed over the last 10 years. It has grown more than 300% over that timeframe. Source: Federal Reserve Bank of New York
Industry Overview At the same
time the cost of attending college has risen dramatically each year, more than doubling the pace of inflation during the past decade! Source: Student Loan Data – College Board, Inflation Data: Bureau of Labor Statistics
Industry Overview Student loans as
percentage of total consumer debt has also ballooned: Source: Federal Reserve Bank of New York Q1 2003 Q2 2013 Growth Mortgage $4,942 $7,841 59% Home Equity Revolving $242 $540 123% Auto Loan $641 $814 27% Credit Card $688 $668 -3% Student Loan $241 $994 313% Other $478 $296 -38% Total $7,231 $11,153 54% Total Outstanding Debt ($ billions)
The Industry The 2010 passage
of the Student Aid and Fiscal Responsibility Act (SAFRA) removed the Federal government guarantee on students loans that were privately issued by banks. As a result, banks have seen the student loans held on their balance sheets shrink dramatically. But two lenders have seen them rise, and one is up over 5X.
A Deeper Look at the
Deficit Student loans aren’t the only issue! The U.S. government has piled on more than $10 trillion in new debt since 2000. Annual deficits topped $1 trillion after the financial crisis. The Motley Fool's new free report, "Everything You Need to Know About the National Debt," walks you through step-by- step explanations about how the government spends your money, where it gets tax revenue from, the future of spending, and what a $16 trillion debt means for our future. Click here to read the full report!