Board of Governors of the Federal Set-aside Program

26. See David J. Deming, Claudia Goldin, and Lawrence F. Katz, “The For-Profit Postsecondary School Sector: Nimble Critters or Agile Predators?” Record of Economic Views 26, no. 1 (Winter 2012): 139–64, for a discussion of the rates of return by education sector. Return to text

Brand new Federal Set aside, new central bank of your own All of us, has got the nation which have a secure, flexible, and stable economic and financial system.

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Education loan Loans and you will Aggregate Use Increases

Between 2001 and 2016, the real amount of student debt owed by American households more than tripled, from about $340 billion to more than $1.3 trillion. The increase largely reflects an acceleration in student loan originations that was mainly due to a surge in college enrollment and ongoing increases in real tuition levels. 1 The expansion of student loan borrowing, and the associated increase in post-college student loan debt service, has raised concerns that this borrowing is constraining consumption and economic growth. Although student debt service is undoubtedly a source of severe financial strain for some individuals, in this discussion we show that the direct effect of increased student debt service on aggregate consumption growth is likely small. We also argue that indirect–and hard-to-quantify–channels, such as the effect of student loan debt on access to credit or debt aversion, are probably small as well, but we cannot rule out that these channels could hold down consumption more meaningfully. Continue reading