One of the few supposed blessings of the financial crisis is that Americans are slowly paying off the debts they racked up during the bubble. But there is one glaring exception: loans for higher education.
New figures from the Federal Reserve show that total student-loan debt now amounts to $550 billion, up from $100 billion a decade ago, a 450 percent increase. The accompanying chart shows how the path of student loans has diverged since 2008 from that of total indebtedness (including mortgages, credit cards, auto loans and the like), which has fallen to $11.42 trillion from a high of $12.5 trillion.
In comparing the situation today with that of a decade ago, it's important to note that there are more and easier ways to obtain loans today than in 2001, and we've seen tuition costs explode. And as Bloomberg View columnist Jeffrey Goldberg reminds us, in today’s economy, it’s better to have a degree than not. (Over at the Atlantic, Andrew Hacker and Claudia Dreifus have thoughts on the "moral dimensions" of student debt.)
Something to consider: With all the debt issues and today's high unemployment rate, what would happen to the economy if vast numbers of students defaulted on their loans?
(Kirsten Salyer is the social media producer for Bloomberg View.)