US student debt tops $1.31 trillion: Does Betsy DeVos have a plan?
Student loans were聽the leading cause for a substantial increase in household debt last year, the Federal Reserve Bank of New York said Thursday.
While the high balance of US student debt is not news anymore, the new record-high $1.31 trillion balance, up聽,聽is another reminder of the severity of a problem that has cast a shadow over the nation in recent years.
During her confirmation hearing, now-Secretary of Education Betsy DeVos suggested a vision for higher education that might not require as much student debt.
鈥淲e need to聽,鈥� said Ms. DeVos, who has championed trade schools and for-profit online universities. 鈥淔or too long, a college degree has been pushed as the only avenue for a better life. The old and expensive brick-mortar-and-ivy model is not the only one that will lead to a prosperous future.鈥�
Loans taken out by undergraduate and graduate students are a key driver of household debt, explained Wilbert van der Klaauw, senior vice president at the New York Fed, in a statement. "Debt held by Americans is approaching its previous peak, yet its composition today is vastly different as the growth in balances has been driven by non-housing debt," he said.
"Since reaching a trough in mid-2013, the rebound in household debt has been led by student debt and auto debt, with only sluggish growth in mortgage debt," he said.
Contributing $31 billion of the $226 billion increase in total household debt, student debt balances have rise every year for the past 18 years, the report shows. While the total household loan balances have dropped 1 percent since year-end 2008, student loan and auto debt are the only two categories of consumer debt tracked by the New York Fed that have steadily increased during the same period.
But the $1.31 trillion figure is lower than the one reported by the Federal Reserve Board in Washington, which pegs total student debt $100 million higher, at $1.41 trillion.
Regulators blame the discrepancy on the New York Fed鈥檚 sampling of household credit reports, which are .
The news of the record-high student loan balance comes two weeks after DeVos was confirmed as the new secretary of Education, the department that is the largest provider of student loans. While she said she recognized the severity of the issue, as someone who has no personal experience with college financial aid 鈥� neither she nor her children had ever borrowed money for school 鈥� her nomination had come under much scrutiny.
鈥淭he issue of student debt and the amount of student debt 鈥� over $1.3 trillion right now up, 鈥� that鈥檚 a very serious issue,鈥� DeVos said at her confirmation hearing, mistakenly referencing the growth of college costs over 30 years.
With her support for the for-profit industry and upholding vocational education as 鈥渁 noble pursuit,鈥� DeVos also signaled an unwillingness to commit to enforce the 鈥済ainful employment鈥� rule championed by the Obama administration. This controversial standard, which seeks to punish schools that leave students with high levels of debt but weak job prospects, was seen as targeting for-profit colleges.
During her hearing, she was asked about tuition-free colleges, which formed a major part of Sen. Bernie Sanders鈥檚 campaign platform.
鈥淪enator, I think that is a really interesting idea and it鈥檚 really great to consider and think about,鈥� she said. 鈥淏ut we also have to consider the fact that there is nothing in life that鈥檚 truly free. Somebody has got to pay for it.鈥�
Despite her often noncommittal answers to questions on student loan delinquencies, default, and interest rates, DeVos expressed her commitment to learning more about both sides of the issues and working with the senators.
鈥淲e can work together and we can work hard on making sure college 鈥� or higher education in some form 鈥撀爄s affordable for all young people that want to pursue it,鈥� she said.聽
