Jeffrey Dorfman
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I use economic insight to analyze issues and critique policy.
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Opinion 15.928 views
Time To Stop The Sob Stories About Student Loan Debt
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The
media and advocates for income redistribution are creating a continual
stream of stories about the student loan crisis. We are inundated with
sob stories about people suffering under a crushing debt burden. The New York Times
alone has had stories on how student loan debt is now a problem for
senior citizens, how young people’s lives have been ruined, and how a
whole generation will be unable to buy homes because of their student
loan debt. Luckily, these stories are based simply on a few scattered
cases. In reality, there is no student loan debt crisis and it is time
for the media to report the facts, not the sob stories.
The New York Times informed its readers last week that there are now two million people over 60 years old that still have student loan debt, with an average loan balance of $21,000. To put this report in context, those two million seniors represent only three percent of all people in that age bracket and the average balance of $21,000 is only 78 percent of the size of the average car loan ($27,000). Assumedly many more than three percent of Americans over the age of 60 have car loans, yet nobody thinks that is a crisis.
Earlier this summer, The New York Times also implied that student loan debt is blocking younger Americans from buying homes. In reality, as the Times admits later in their article, the rate at which young people are buying homes is simply returning to its previous level because today’s young can see that the twenty-five year real estate bubble is over and there is no need to rush into home ownership.
Similarly, back in the spring, The New York Times told us a series of sob stories about recent graduates buried under crushing burdens of student loan debt. While the media seem endlessly able to find stories of students with six-figure student loan debts and little in the way of job prospects with which to pay off those debts, such cases are far from common.
Research by Beth Akers and Matthew Chingos at The Brookings Institution revealed much about the student loan debt reality. While the average student loan balance is $29,000, that is only for the minority of people with any student loans (36 percent of those between 20 and 40). In other words, most young people have no student loan debt. Also, the average balance is greatly inflated by the presence of a few people with large balances. In fact, only four percent of households headed by people between 20 and 40 years old have student loan debt of over $36,000 per person and two-thirds of those have a graduate degree to show for that debt
The New York Times informed its readers last week that there are now two million people over 60 years old that still have student loan debt, with an average loan balance of $21,000. To put this report in context, those two million seniors represent only three percent of all people in that age bracket and the average balance of $21,000 is only 78 percent of the size of the average car loan ($27,000). Assumedly many more than three percent of Americans over the age of 60 have car loans, yet nobody thinks that is a crisis.
Earlier this summer, The New York Times also implied that student loan debt is blocking younger Americans from buying homes. In reality, as the Times admits later in their article, the rate at which young people are buying homes is simply returning to its previous level because today’s young can see that the twenty-five year real estate bubble is over and there is no need to rush into home ownership.
Similarly, back in the spring, The New York Times told us a series of sob stories about recent graduates buried under crushing burdens of student loan debt. While the media seem endlessly able to find stories of students with six-figure student loan debts and little in the way of job prospects with which to pay off those debts, such cases are far from common.
Research by Beth Akers and Matthew Chingos at The Brookings Institution revealed much about the student loan debt reality. While the average student loan balance is $29,000, that is only for the minority of people with any student loans (36 percent of those between 20 and 40). In other words, most young people have no student loan debt. Also, the average balance is greatly inflated by the presence of a few people with large balances. In fact, only four percent of households headed by people between 20 and 40 years old have student loan debt of over $36,000 per person and two-thirds of those have a graduate degree to show for that debt
