Tuesday, May 27, 2014

Nice graph(s) putting Student Debt levels since 2005 in perspective

From the St Louis Federal Reserve ("The Share of Borrowers with High Student Loan Balances is Rising")

The top graph shows the ratio of outstanding student debt in a particular year to the debt level in 2005. For example, take the time period of between 2011 and 2012 (I inserted an RED vertical line).

Total Student Debt (top green line) was 2 times what it was in 2005.

The number of debtors is about 1.58 times more than in 2005.

The average balances held by debtors was about 1.3 times as much as those in 2005.

The bottom bar chart shows, in percent form, the change in debt levels from students in 2005 and 2012.

In 2005 about 56% of student loan balances were $10,000 or less (darker bar). In 2012--40% (lighter bar)---PROGRESS, right!! Not so fast.

The difference essentially moved to the higher average debt levels.  Notice the light bars get significantly higher than the dark bars as average debt levels increase, showing a larger (1) nominal change and more importantly (2) a significant percentage change from one time period to another.

For instance, the change in average balances in the $25K-$50K went from 11% to 18% (eye-balling).  That is a 7% percentage point increase, but NOT a 7% increase in average loan balance. The percentage increase would be (18% - 11% = 7% and 7%/11% X 100) +64%.

If you are already in college you are well aware of this.

If you are thinking of going to college you should be aware of this.

If you are a teacher of High School students you should be aware of this AND make your students aware of it also.

Hope this helps.
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