Consumer Protection Agency Says Previous Estimates Were Too Low, Student Debt Already Exceeds $1 Trillion

Pat Garofalo
Think Progress / News Report
Published: Thursday 22 March 2012
A study released yesterday shows that “almost two-thirds of U.S. student- loan borrowers misunderstood or were surprised by aspects of their loans or the student-loan process.”
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Last year, the New York Federal Reserve estimated that student loan debt would exceed $1 trillion for the first time in 2012. At the moment, the New York Fed claims that $870 billion in student loan debt is outstanding.

However, the Consumer Financial Protection Bureau — the agency created by the Dodd-Frank financial reform law, which is tasked with policing consumer lending — believes that the New York Fed is underestimating the amount of student debt that Americans hold. In fact, a CFPB analysis shows that student debt has already cleared $1trillion:

Total student debt outstanding appears to have surpassed $1 trillion late last year, said officials at the Consumer Financial Protection Bureau, a federal agency created in the wake of the financial crisis. That would be roughly 16% higher than an estimate earlier this year by the Federal Reserve Bank of New York.

The new figure—released Wednesday at a banking conference in Austin, Texas—is a preliminary finding from a study of student debt that the bureau plans to release this summer. Bureau officials said the estimate is based on a survey of private lenders, as opposed to other estimates that rely on a sampling of consumer credit reports.

That the debt number is this high is a sad result of the fact that, since 1985, the cost of college tuition and fees has nearly sextupled, while financial aid has failed to keep up. This month, 80 percent of bankruptcy lawyers said in a survey that they’ve seen a substantial increase in clients buried in student debt.

A study released yesterday shows that “almost two-thirds of U.S. student- loan borrowers misunderstood or were surprised by aspects of their loans or the student-loan process.” The CFPB began accepting complaints regarding the student loan industry this month.



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ABOUT Pat Garofalo

Pat Garofalo is Economic Policy Editor for ThinkProgress.org at the Center for American Progress Action Fund. Pat’s work has also appeared in The Nation, U.S. News & World Report, The Guardian, the Washington Examiner, and In These Times. He has been a guest on MSNBC and Al-Jazeera television, as well as many radio shows. Pat graduated from Brandeis University, where he was the editor-in-chief of The Brandeis Hoot, Brandeis’ community newspaper, and worked for the International Center for Ethics, Justice, and Public Life.

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5 comments on "Consumer Protection Agency Says Previous Estimates Were Too Low, Student Debt Already Exceeds $1 Trillion"

palsimon

March 22, 2012 11:17pm

Reading about Congressman Clarke's Student Loan Forgiveness Act, I am very confused as to whether those who are presently overburdened with student loan debt will actually get help even if a law is passed. I perceive it as being a promise (perhaps in hope of votes) that a bill MIGHT pass that will give relief to some - maybe in form of a future type of loan. But the PR I have read about this bill does not give much hope either that it will be adequate or ACTUALLY GET PASSED. We do know that similar legislative actions to help victims of foreclosure that were supposed to relieve homeowners were, in effect, aids to banks. For example, funds were provided counseling agencies, not directly to homeowners in trouble. And those will mainly be used to help buyers buy the bank-owned properties they have already foreclosed. Like they say, 2 things disgusting to watch: making sausage and making laws.

weneedrevolution

March 22, 2012 7:01pm

There's something seriously wrong when a 50-yr old is still paying tuition loans because he had to relearn skills to get a new job while his kids are racking up loans themselves. There's no way in hell those loans are getting paid. Everyone's a slave.

AnnieK

March 22, 2012 5:25pm

colleges and universities played their own role in this tragedy, as they market their wares to students and tell them not to worry about debt. This time Wall St., will be ready and will not allow LENDERS to fail. The taxpayers will, once again, pay this bill one way or another. Sallie Mae is worse than the Mafia....

AnnieK

March 22, 2012 5:25pm

colleges and universities played their own role in this tragedy, as they market their wares to students and tell them not to worry about debt. This time Wall St., will be ready and will not allow LENDERS to fail. The taxpayers will, once again, pay this bill one way or another. Sallie Mae is worse than the Mafia....

Guadamour

March 22, 2012 2:58pm

Setupled! Something is seriously wrong here! When I entered the university--instate tution was $125.00 a semester. Are we gong to short change the future. For law school I paid $450.00 a year.