Reading the Tea Leaves as Student Debt Increases

Editors' pick: Originally published Nov. 3.

$1.4 trillion. That's become the widely recognized value of outstanding student loans from the federal government and private lenders. That's about 9% of the gross domestic product.

Last summer it was $1.3 trillion. Then the whisper number was $1.4 trillion. Now it's no longer a whisper. But what do these numbers mean? Do they illuminate or obscure a larger problem?

"We do not have much good data on student loans," said Mark Kantrowitz, publisher and vice president of strategy at "What data we have is a patchwork of data sources, each of which has a different set of flaws."

Where student loans sit in relation to other types of consumer debt--credit cards, for example--and how they interact is typically not taken into account.

Department of Education (ED) spokesperson Alberto Betancourt referred an inquiry about loan balances to the Federal Student Aid loan portfolio summary, where, based on the National Student Loan Data System, the 3Q 2016 federal loan balance for federal Direct Loans is $911.6 billion plus $342.6 for unpaid loans on the FFEL program that was discontinued in 2010 and $8.0 in Perkins Loans. That totals $1.262 trillion. Private loans from banks and non-bank lenders such as Navient, formerly known as Sallie Mae, are not included in ED's data.

The U.S. Federal Reserve Bank has been using the $1.3 trillion figure but former FDIC Chair Shelia Bair cited $1.4 trillion in a September speech to the American Bankers Association; the Student Loan Debt Clock managed by has blown past that figure. The Consumer Financial Protection Bureau uses "roughly $1.4 trillion"--and cites the Fed's data as its source. Last week CFPB spokesperson Moira Vahey stated, "This datapoint is from the Federal Reserve's monthly Consumer Credit statistical Report G 19--August 2016 edition--which shows the student loan balance outstanding as of June 2016. The actual figure is $1.3635 trillion, which would round to $1.4, thus the roughly $1.4 trillion" figure.

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