Banking on Education

BANKING ON Students to Pay EDUCATION Than Banks 800% More Interest HOW MUCH MONEY? $1.1 TRILLION Approximate total outstanding student loan debt up from $200 billion in 2002 Second only to mortgages in household debt 37 MILLION 6.7 MILLION Number of borrowers who are Number of borrowers with 90 more than 90 days delinquent on a student loan outstanding student loans Student loan debt has nearly $1,000 quadrupled in the past ten years. $750 $500 $250 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Source: Federal Reserve Bank of New York Average Oustanding Student Debt 10% of student Per Household debtor households $26,682 $23,349 $20,022 $17,942 $17,562 $11,714 $11,086 $9,634 owe more than $61,894 1989 1992 1995 1998 2001 2004 2007 2010 Source: PEW Research Center WHO IS IMPACTED THE MOST? 69% of student loan debt is paid by lower and middle-class families. Households who earn an annual income of $36,723 or less owe 24% Households who earn an annual income 2010 between $36,724 and $97,585 owe 45% OUTSTANDING STUDENT LOAN DEBT Households who earn an annual income of $97,586 or more owe 31% How much of every dollar earned goes to paying student debt loans? LOWER INCOME MIDDLE INCOME HIGHER INCOME 24 cents 12 cents 2 cents $1 $1 $1 $91,275 From 2007-2010, while total borrowing Mean Annual rose by 49% Household Income $80,805 fell by 11% 2007 2010 HOW DOES THIS AFFECT THE ECONOMY? Student loan debt was the only major type of debt to increase in prevalence among young households during the recent recession. CREDIT 2007 48% CARD DEBT ---- --- ---- ---- 2010 39% VEHICLE DEBT 2007 44% 2010 32% STUDENT LOAN DEBT 2007 34% ---- ---- ---- 40% 2010 75% 41% have postponed contributions to retirement plans 40% have delayed car purchases 29% have put off buying a house of respondents said they have made personal or financial sacrifices because of student loan 15% have postponed marriage debt RETIREMENT 37% PLANS Rise in workers aged 30-39 with insufficient resources in 62% retirement CAR PURCHASES BUYING A HOUSE $200 million+ 73% 40% in annual new car sales are lost as a direct 66% 34% result of student loan Sharp fall in younger Drop in the share of younger households owning or leasing debt households with their own at least one vehicle primary residence WHAT IS THE BIG PICTURE? Student loan debt affects America: less money to spend means fewer homes and cars purchased, fewer small businesses started, less money saved for retirement, and fewer people living in smaller rural communities. What does this mean for the average student? 6.8% 6.8% On July 1st, interest Banks currently pay rates on student 0.75% interest rates: loans are set to 800% less 3.4% increase from than what students 0.75% 3.4% to 6.8% will pay PRESENT JULY 1, 2013 BANKS STUDENTS If no action is taken, the average student will pay $2,564 more How do Americans feel? 6.8% 6.8% 83% OF AMERICANS 3.4% OR want to keep student loan rates at 3.4% or to lower them to the 0.75% same rate banks pay (0.75%) PRESENT JULY 1, 2013 BANKS STUDENTS 75% OF VOTERS are less likely to vote for their representative if they voted to double rates to 6.8% or allowed them to increase to a maximum of 8.5% D F A DEMOCRACY FOR AMERICA aicpa.org americanprogress.org IN democracyforamerica.com files.consumerfinance.gov jsonline.com libertystreeteconomics.newyorkfed.org motherjones.com moveon.org nerdwallet.com onewisconsinnow.org pewsocialtrends.org BROUGHT To PARTNERSHIP YOU BY: WITH: GHERGICH&Co. ($ billions) 000