Reading the triennial Survey of Consumer Finances published by the Fed, something really worrisome starts to emerge from the results. Education debt has grown at a remarkable pace over the last 27 years. Lets start by looking at the average amount of education debt for years 1989, 2001, and 2013 (all values are in 2013 dollars).
Average Education Debt
The rise of education related debt is obvious across all age groups, but it stands out for the 35 and under demographic due to an almost exponential growth from 2001 to 2013. This also holds true for the 45-54 demographic (perhaps as a result of going back to school or difficulty with paying down prior debt). So does the same hold for other types of installment debt? Well, lets take a look at the vehicle related debt for the same period of time.
Average Vehicle Debt
As we can see, there has been very little change across the years when accounting for inflation. In fact, the 35 and under demographic has actually decreased their average holdings of vehicle debt from 2001 to 2013. When we put it all together, the share of education debt relative to vehicle and other types of installment debt has spiraled to an unprecedented level since 1989. For the 35 and under age group, education debt made up only 21% of all installment debt in 1989. In 2013, that number has reached an incredible 68%.
Percent Share of Installment Debt (35 and under age group)
That’s right, in 2013, education debt has accounted for 68% of all installment debt for people under 35. I am eagerly awaiting the results of the 2016 survey which are due to be published later this year, but I am not holding out hope for any meaningful improvement in these numbers.
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