The next wave of student debt is coming, and according to a new study, more Americans are overindebted than ever.
In fact, the number of Americans who have a student loan surpassed $1 trillion for the first time in history, the report said, with more than a million Americans owing more than $1,000 per person.
“There is a lot of pent-up demand out there for higher education,” said Robert Shorrock, a senior vice president at the Center for American Progress.
“This is not a temporary situation, and it’s going to continue.”
While the number and type of students graduating from college have been increasing, Shorrocket said the trend has been particularly pronounced among students from families earning $50,000 or less, who have seen their debts soar in the past few years.
More than half of American households owe more than their incomes, which means that roughly a quarter of the country’s population has a debt that exceeds their household income.
Shorrock said the number will continue to grow, especially as the cost of living rises.
And while that’s happening across the board, many students are facing a new reality: They’ll need to borrow more to make ends meet.
The Center for Consumer Freedom, a nonprofit research and advocacy group based in Washington, D.C., surveyed more than 600,000 borrowers and found that nearly half of students had more debt than they had income.
In addition, more than half had some debt owed, including loans to attend community colleges, community college loans, and student loans to pay for college.
“In many ways, students have to borrow to survive,” Shorrocksaid.
“They don’t have access to the kind of financial help that their parents and grandparents had.
It’s a real problem.”
Shorroksaid the study also found that the proportion of borrowers who could afford to repay their student loans had fallen by more than 30 percent in the last five years.
“The numbers are growing, and they’re not going to stop,” he said.
“But we’re seeing a significant amount of people who have debt that they can’t afford to pay.”
The Center’s research found that a quarter or more of the student loan borrowers surveyed reported having debts that exceed their income, up from 25 percent of borrowers in 2013.
Shorrington said that trend has accelerated in recent years as more borrowers have become educated and as higher education has become more expensive.
“We’ve seen a big shift toward students who are in a position to get a college degree,” he added.
“That’s a shift that has been going on since the Great Recession.”
Shorsrock pointed out that more than three-quarters of borrowers surveyed who had been in debt said they had not repaid any of their loans, a figure that has increased by more for borrowers with student loans.
According to the report, the average amount owed by borrowers with debt exceeded the amount owed on loans to purchase homes by about $100,000 in 2016.
And about $200,000 of that debt is owed to the federal government.
“That’s not good for the economy,” Shorsrock said.
“It’s also not good when it’s not paid back in full, because it puts pressure on the federal budget.”
Shora said he and other researchers believe that the trend of rising debt is being driven by changes in the way student loan payments are made.
The government and some banks are making payments on higher-interest student loans faster and more often, he said, which makes it more difficult for borrowers to get out of debt.
But Shorstone said it’s important to remember that students are taking on debt for a variety of reasons, from attending school to getting a degree.
“These are all very real challenges that a lot people in this country face,” he concluded.
“When you’re a student in this generation, you’re not just taking on loans.
You’re taking on mortgages, you take on credit cards, you can get into debt, you have a car and you’re working and you live in a city.”
Follow David A. Fahrenthold on Twitter: @fahrentholds