Forbes: Are Student Loans A Ticking Time Bomb?

November 5, 2015

Could student loan debt be a catalyst in the next financial crisis? While some are familiar with the issue, many are unaware of the problem it poses. In this article, we will examine the data and explain it in simple terms. We will discuss the number of student loan recipients, the average loan per student, and most importantly, the amount of student loan debt as a percentage of the national debt. We will also reveal the reason behind the recent explosion in the student loan program.

Student Loan Debt Overview

To begin, here are a few facts to consider.
1) Total outstanding student loan debt is about $1.3 trillion
2) Student loan debt has doubled since 2009, averaging over 12.0% per year
3) The number of student loan recipients has increased 4.7% per year since 2007
4) The average student loan debt per student is $28,973

Student loan debt has become a significant component of the national debt. This is largely due to the expanded role of the federal government. According to Mary Clare Reim, Research Associate with the Heritage Foundation, “93% of all student loans offered these days are from the federal government.” She added, “The government has essentially created a monopoly by offering more attractive loans, thus crowding out private lenders. When students are unable to pay off the loan, the taxpayer is left to pick up the tab.”