Student-Loan Debt, Delinquency, and Default: A New England Perspective

Abstract

In 2009, student-loan debt became the largest non-housing-related consumer debt in the United States. By 2013, outstanding student debt balances had grown to exceed $1 trillion, and by the end of 2015, had reached $1.23 trillion. These milestones coincided with increasing rates of delinquency and default among borrowers, raising concerns about the affordability of this debt. In addition, researchers have recently found an array of adverse effects from such debt, including the impact on homeownership and vehicle purchases, small-business formation, and retirement preparedness. These factors have led many to call the extent of student-loan debt a ?crisis.? For New England, with its highly educated population and large higher-education industry, student-loan debt is a salient economic and policy issue. All six New England states have formed subcommittees, fielded commissions, contracted studies, and proposed or passed legislation targeting student-loan debt. These actions have yielded diverse policy responses, including initiatives aimed at improving financial literacy, boosting child college savings accounts, increasing state aid to state colleges and universities, refinancing student loans, and offering tax credits or loan forgiveness to graduates.