You may have heard by now that student loans are the second-largest source of consumer debt in the United States — only overshadowed by home mortgages. But student debt has easily surpassed credit cards or car loans.
So one would conclude that the U.S. government, holder of a $1 trillion student loan portfolio, has extensive data on how many borrowers are delinquent on their federal loans — if not for any other reason but to gain a foothold on this new debt bubble.
But the New York Times has published a news analysis outlining how much the U.S. government doesn’t know about its student loan portfolio. It was written by Susan Dynarski, a professor of economics, education and public policy at the University of Michigan. She has advised the Obama administration on the findings of her student-aid policy research.
Dynarski: “That’s just a start. We also don’t know how many borrowers are eligible for federal debt relief, which caps payments and forgives balances, or how many have tried, but failed, to get such relief.”
U.S. education officials can’t put a precise number on how delinquencies differ by amount of debt, income and education And they don’t know which colleges leave students “underwater,” with low earnings and large debts they can’t pay.
“Because we can’t answer these questions, we can’t quantify the risks that student debt places on individual households and the economy as a whole. This limits our ability to help borrowers before they spiral into default,” Dynarski writes.
Denise Horn, a U.S. Education Department spokeswoman, directed Dynarski to a website where the government publishes some information about its $1 trillion student loan portfolio. But the data does not provide delinquency rates for all loans, or information on how many borrowers have managed to renew their debt relief.
Horn suggested that Dynarski file a Freedom of Information Act request for more information.
“Analyzing the complicated student loan market may not be a job for the current Education Department, which lacks a chief economist,” writes Dynarski. “Another agency might be better equipped to handle it, allowing the department to focus on its central goal: improving education.”
Read her article here.