A recent FRB Board of Governors (FRB-BOG) report on the Economic Well-Being of U.S. Households in 2017, published in May 2018 informs us about the student debt situation:
Over half of college attendees under age 30 took on some debt to pay for their education. Most borrowers are current on their payments or have successfully paid off their loans, although those who failed to complete a degree and those who attended for-profit institutions are more likely to have fallen behind on their payments. • Among those making payments on their student loans, the typical monthly payment is between $200 and $300 per month. • Nearly one-fourth of borrowers who went to forprofit schools are behind on their loan payments, versus less than one-tenth of borrowers who went to public or private not-for-profit institutions.
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As the table below shows, many families have taken debt to finance education of their children and/or grandchildren. This creates a "spillover effect" on debt ownership that continues to burden older adults, even after their offspring have become independent adults.
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Here are some interesting anecdotes quoted from the same FRB-BOG report:
- Nearly 25 percent of young adults under age 30, and 10 percent of all adults, receive some form of financial support from someone living outside their home.
- Four in 10 adults, if faced with an unexpected expense of $400, would either not be able to cover it or would cover it by selling something or borrowing money. This is an improvement from half of adults in 2013 being ill-prepared for such an expense
- Over one-fifth of adults are not able to pay all of their current month’s bills in full.
- Over one-fourth of adults skipped necessary medical care in 2017 due to being unable to afford the cost
- Nearly half of adults age 22 and older currently live within 10 miles of where they lived in high school, but those who have moved farther from home are more likely to be satisfied with the overall quality of their neighborhood.
- Out-of-pocket spending for health care is a common unexpected expense that can be a substantial hardship for those without a financial cushion. As with the small financial setbacks discussed above, many adults are not financially prepared for health-related costs. During 2017, over one-fifth of adults had major, unexpected medical bills to pay, with a median expense of $1,200. Among those with medical expenses, 37 percent have unpaid debt from those bills. In addition to the financial strain of additional debt, over one-quarter of adults went without some form of medical care due to an inability to pay.
- Those with less income are more likely than others to forgo medical care due to cost. Among those with family income less than $40,000, 39 percent went without some medical treatment in 2017. This share falls to 25 percent of those with incomes between $40,000 and $100,000 and 9 percent of those making over $100,000.
- Over the past several decades, the rate at which Americans move—both short distances within states and longer distances across the country—has steadily fallen. This reduction in geographic mobility also fits within a pattern of less job switching, more generally, or reduced labor market fluidity.
I highly recommend reading the full FRB-BOG report for those of you who are concerned about the future of our economy and the welfare of our general population.
All the best,
--Dr.Flywheel
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