Interesting article in #Bloomberg and #WSJ on #student #loans- a topic that had been forgotten in the wake of the recent change in the political climate. Such significant turns on policies do create confusion, and one area that is manifested is the sharp drop in #credit scores that many Americans are experiencing. According to the articles, inconsistent communication and lingering confusion are partly to blame. It's not a surprise- and it underscores how quickly political and policy pivots can destabilize citizens and the broader economy. According to the articles, the resurgence of student loan #delinquencies is poised to impact borrowers' credit scores severely. With the conclusion of pandemic-era relief measures, over 9 million borrowers—representing approximately 43% of federal student loans—are behind on payments. This delinquency is expected to push 2.3 million individuals into #subprime credit status, with credit scores dipping below 600. As of 2025, the total student loan debt has surpassed $1.7 trillion, a stark increase from $0.5 trillion in 2006. Analyzing debt distribution across age demographics reveals that individuals aged 35 to 49 hold the largest portion of student loan debt, totaling approximately $636 billion. Notably, borrowers aged 50 to 61 carry the highest average debt per individual, exceeding $45,700. This trend indicates that student debt is not confined to younger populations; many older Americans are either still repaying their own education loans or have assumed debt to support their children's education. The impending credit score declines have broader economic implications: 1️⃣ Reduced #Consumer Spending: Lower credit scores can lead to higher borrowing costs and decreased access to credit, prompting consumers to cut back on expenditures. Given that consumer spending constitutes nearly 70% of the U.S. GDP, this contraction could slow economic growth. 2️⃣ Financial Sector Impact: A surge in subprime borrowers elevates the risk profile for financial institutions. Banks may face increased default rates, necessitating tighter lending standards and potentially leading to a decline in loan origination. 3️⃣ Policy-Induced Uncertainty: The shift from lenient repayment policies during the pandemic to the current stringent enforcement has created uncertainty. Such abrupt policy changes can undermine consumer confidence, affecting financial planning and spending behaviors. WSJ - https://lnkd.in/dWMqZtq7 Bloomberg - https://lnkd.in/dEPGmWa7 #Economy #ConsumerCredit #Banking #FinancialStability #StudentLoans #CreditScores #EconomicUncertainty
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3dWhat I find interesting is that tuition costs at my public university have increased nearly 9% per year (each and every year) for over three decades. That would be a great business model for a "for profit" institution if you could get that compound annual growth in a revenue stream over that period of time. Oh wait, it is!