Law Books For The Price Of Printing?

June 30th, 2016 / By

Originally published on Above The Law.

library w bookLaw students spend between $3,000 and $4,000 on books during law school. For those that borrow, add another $1,000 on the 10-year plan or $2,000 on the 20-year plan. While a drop in the bucket compared to tuition and living expenses, $4,000 to $6,000 for books is not insignificant.

Shaving these costs down to the cost of printing is a common suggestion, but it does not appear to have been done at scale. In a new article in the Saint Louis University Law Journal, Professor Ben Trachtenberg from the University of Missouri School of Law outlines how to actually do it with the goal of encouraging action.

The question is: will it happen?

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What President Obama’s 2017 Budget Tells Us About Law Schools

February 16th, 2016 / By

Originally published on Bloomberg.

As law school — as well as other graduate and professional programs — become ever-more costly, the viability of the current federal student loan program wanes. The latest evidence comes from President Obama’s 2017 budget proposal, released last week.

But first a little history.

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How Student Loan Refinancing Could Undo Federal Loan Policy

January 26th, 2016 / By

Originally published on Above the Law.

If you’re a law school graduate with a ton of debt, there are a few companies that really want to talk to you — if you went to the right school and have the right job.

The deal works like this. The bank or non-bank lender pays the federal government the balance of your loan and you pay the new lender instead. In exchange, the private lender charges you a much lower interest rate. Rather than a rate north of 7%, you receive a rate as low as 2.5%.

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The Federal Government’s Massive and Declining Investment in Legal Education

May 22nd, 2013 / By

Nowadays, law students borrow from the Department of Education Direct Loan Program for school. These loans are income-generating assets for the government. As such, I thought it would be interesting to see how large of an investment the federal government presently makes in law schools.

Based on my calculations, the total annual federal investment in law schools through student loans is currently $4.88 billion (2012-13 school year). Last year (2011-12), that number was $4.95 billion.

Calculating the annual investment required a sequence of estimates along with hard data. First, I used school-supplied data to calculate the government’s investment in 2012 graduates of ABA-approved schools. Second, I incorporated ABA-supplied enrollment data to estimate the government’s investment in all students enrolled during 2011-12. Finally, I used enrollment figures and tuition estimates to extend that projection to 2012-13, the academic year that just closed.

Students, of course, use their loans to cover living costs as well as law school tuition and fees. Law students, however, are forbidden from working during their first year, and find limited opportunities for paid work during the second and third years. Law schools can recruit students only as long as the students have a way to pay for both tuition and living expenses. It’s appropriate, therefore, to speak of educational loans to law students as an investment in law schools, not just students.

1. $4.43 Billion Federal Investment in 2012 Graduates of ABA-Approved Schools

Hard Data on 192 ABA-Approved Schools: $4.33 Billion. Students who graduated law school in 2012 borrowed at least $4.33 billion in federally-guaranteed and federal direct student loans to finance their legal education: that’s the amount of federal loan dollars processed and disbursed by 192 law schools to their 2012 graduates who borrowed for law school.

To calculate the amount loaned for each school (available in the table here), I took the number of graduates and multiplied it times the percentage of those graduates borrowing loans processed by the school. I rounded that number to the nearest whole graduate and multiplied it times the average amount borrowed for that school. The known federal government investment figures do not include students who never graduated and those enrolled in non-JD programs.

Here is a table that aggregates federal investment by school type:

Type Schools Accounted For Avg. Debt/Student(% of all grads borrowing) Total Federal
Private (Non-Profit) 110/113 (97.3%) $125,963 (84.2%) $3,064,183,905
Public School 77/81 (95.1%) $89,078 (83.8%) $1,110,978,434
(For Profit)
5/5 (100%) $138,149 (91.7%) $150,167,940
All Types 192/199 (96.5%) $114,170 (84.3%) $4,325,330,279

The following schools did not report sufficient borrowing data to U.S. News: Barry University (Private, 200 grads), Florida A&M University (Public, 160 grads), Indiana University – Indianapolis (Public, 295 grads), Inter American University (Private, 234 grads), Pontifical Catholic University of Puerto Rico (Private, 217 grads), University of Puerto Rico (Public, 202 grads), University of The District of Columbia (Public, 93 grads).

Estimated Investment in 2012 Graduates of Seven Other ABA-Approved Law Schools: $107 million. The seven ABA-approved schools (immediately above) had 1,401 graduates in 2012, but did not provide sufficient data about student borrowing. Three were non-profit private schools (with 651 grads); four were public schools (with 750 grads).

To estimate total federal investment in these graduates I used the average amount borrowed and average percentage borrowing by school type. The result is 548 graduates of the private schools borrowing an average of $125,963 and 629 graduates of the public schools borrowing an average of $89,078, or $125.2 million total. Because the three schools in Puerto Rico are on average much cheaper than their U.S. counterparts, I also discounted the amount borrowed 25% for the public Puerto Rican school and 30% for the private ones. This reduced the total for these seven schools to about $107 million.

Adding that total to the $4.33 billion discussed above yields a grand total of $4.43 billion that the Department of Education invested in students who earned JD’s at ABA-accredited law schools in 2012.

2. 2011-2012 Federal Investment in All Enrolled JD Students: $4.95 Billion

Estimating the federal government’s annual investment in all enrolled students, rather than just graduates, required some arithmetic gymnastics. Here are the calculations for 2011-12, the most recent year for which we have information about borrowing:

The 46,360 graduates in 2012 (with 84.3% borrowing) borrowed $4.43 billion, but that borrowing was over a period of three years during which tuition and cost of living rose steadily. In other words, the $4.43 billion estimate is for students who were first years in 2009-10, second years in 2010-11, and third years in 2011-12. (These numbers account for part-time and joint-degree students by assuming that, overall, their enrollment was steady from year to year.)

I next determined how much the 2012 graduates borrowed just for 2011-12. From the time those graduates entered law school, tuition rose on average about 7% each year. Under that assumption, 2012 graduates borrowed 31.2% of the amount borrowed for the first year, 33.4% for the second year, and 35.4% for the third year. So, 35.4% of the average amount borrowed for 2012 graduates came during 2011-12. Multiply 35.4% times total federal investment in 2012 graduates of ABA-approved schools ($4.433 billion) and the result is $1.569 billion for 2012 graduates during their last year—or an average of $40,146 for each of the students who borrowed.

Assuming that 1Ls and 2Ls followed the same borrowing patterns as the students who graduated, we could estimate the federal government’s annual investment in JD students simply by multiplying $1.569 billion (the amount loaned to 2012 graduates) by three. That yields a total of $4.71 billion. That initial estimate is low, however, because it doesn’t account for attrition. The graduating class is smaller than 1L and 2L classes.

To get a more accurate estimate of the federal investment in all JD students enrolled during 2011-12, I took the ABA-reported total JD enrollment for 2011-12 (146,288) and deducted the number of graduates (46,360). That left 99,928 students who attended JD programs in 2011-12 but did not graduate that year. If those students borrowed in the same percentages as graduating students did, then 84,239 (84.3%) of them took federal loans. Multiplying that amount times the average amount borrowed ($40,146) yields $3.382 billion. The total amount invested in all JD students enrolled during the 2011-12 school year, therefore, was about $4.95 billion.

Note the assumption that the average price paid did not vary by class year. Note, too, that my calculation does not include students at schools not approved by the ABA but nevertheless eligible for Title IV student loans. Nor, finally, did I include students eligible for federal funds who enrolled in LLM or other non-JD programs administered by law schools.

3. 2012-2013 Federal Investment in All Enrolled JD Students: $4.88 Billion

The estimate for 2012-13 faced several additional hurdles. The 2011-12 estimate must be adjusted for tuition rises (which increase the average amount borrowed), changes in total enrollment (which declined substantially), and the percentage of all students borrowing (which I assumed was steady at 84.3%).

In 2010, 2011, and 2012 law schools enrolled new classes of 52,488 students, 48,697 students, and 44,518 students. Based on prior graduation, enrollment data, and past attrition data, I estimated that 47,000 students graduated in 2013. We know that 44,518 were in their first year so, with total enrollment at 139,362 students, about 47,844 students were in their second year.

I next estimated how much these students borrowed in 2012-13. The 2012 graduate had borrowed an average of $40,146 for the last year of law school. If we assume that this amount rose due to tuition increases by an extremely modest 5% for the 94,844 upper-level students (with 84.3% borrowing), the federal investment was $3.37 billion for those students. However, the first-year students (in the aggregate, at least) did not feel the brunt of the tuition increases. Tuition discounts, financed through the upper-level students, were needed to sway prospective students. I assumed that students who began school in fall 2012 borrowed no more for their first year than the 2012 graduates borrowed for their last year. Using that assumption, I estimated that the federal investment in the 44,518 first-year students (with 84.3% borrowing) was $1.507 billion.

That brings total federal loans for JD students to an estimated $4.88 billion for 2012-13. That’s a substantial investment, but note that it’s $70 million less than the federal investment in 2011-12. JD tuition revenue declined significantly during the last academic year.

4. Bonus: 2013-14 Federal Investment Speculation

In 2011 and 2012, law schools enrolled new classes of 48,697 students and 44,481 students. For the coming fall, the most common projection is just 38,000. Based on prior graduation, enrollment data, and past attrition data, I estimate that 43,800 students will graduate in 2014. Using the projection of 38,000 first-year students, I estimate total enrollment at 125,300 students, which would be the lowest since 2000.

What will those students pay for law school, and how much will they borrow? Schools are competing to maintain first-year enrollments, so I predict that incoming students will borrow no more than the ones who just finished their first year (an average of $40,146). If 84.3% of the class continues to borrow from the federal government, then these incoming 1Ls will borrow a total of $1.29 billion. If we assume that the 87,300 upper-level students borrow 5% more than they did in the current year, and continue borrowing in the same proportions, those students will borrow about $3.18 billion. The estimated total federal investment in JD students during 2013-14 is $4.47 billion. That’s a lot of cash, but it’s $410 million less than the estimate for 2012-13.

Note that this estimate doesn’t include any changes in borrowing for living expenses–other than the reduction in the number of students. If inflation increases the cost of living, or if students have more difficulty finding paid part-time employment, total borrowing may be somewhat higher than this estimate. On the other hand, if students reduce living costs, borrowing may be even lower than my projection. The biggest story, here, however, is the reduction in number of enrolled students combined with modulation of tuition.

Putting all of the numbers together, I estimate that the federal government invested $4.95 billion in JD students enrolled in ABA-approved law schools during 2011-12; that it invested $4.88 billion in those students during 2012-13; and that it will invest $4.47 billion in 2013-14.


The calculations grow hazier as we move from hard data to estimates, but they are good ballpark figures for the amounts that law students borrowed from the federal government during the past two years, as well as for the amounts they are likely to borrow during the coming year. Two conclusions immediately stick out to me.

First, the federal investment in legal education is a lot. Compared to the $112 billion in federal investment in all of higher education in FY2012, law schools are disproportionately funded. As the conversation heats up about law school economics and student loans, and whether the federal government thinks such an investment is justified or fair, the estimates provide an idea about the magnitude of the federal government investment.

Second, law schools have a lot less money to spend and it is only going to get worse this coming year. My estimates for 2012-13 and 2013-14 suggest that fewer students are enrolling and that they are paying less tuition. The largest law school class ever enrolled just graduated and it will be replaced by the smallest class in 40 or so years. To enroll the upcoming class, schools will also likely offer larger discounts than ever before—a number that has been growing very quickly. My projections suggest that law students will borrow $480 million less during 2013-14 than in 2011-12 from the federal government. That’s a loss of almost a half billion dollars caused by lower enrollment and heavily discounted tuition. Information can do wonders, even in a dysfunctional market.

Schools may make up for some lost revenue through non-JD programs, which continue to expand unregulated and quickly. Others will have to cut costs. Most law schools will survive, but they have difficult decisions ahead.

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Unconscionable Debt

April 18th, 2013 / By

Third-year students with federal loans are completing their mandatory exit counseling. That online program shows students how much they have borrowed to finance their education, their current debt (with interest), estimated monthly payments, and other information designed to help them manage their loans. Some students have shown me their print-outs, and the numbers are shocking.

Here is just one example: A single, unmarried student attended a flagship public law school with the median scholarship offered by that school. He had no family support or other assets, so he borrowed to finance his discounted tuition and living expenses. He worked throughout his second and third years of law school, but was only able to obtain low-paid faculty research positions and unpaid internships. Over his three years of law school, he borrowed $123,865.

That amount, I predict, will be common among students graduating from public law schools this spring. It may not yet represent the average at public schools, but I estimate that at least a third of current 3Ls at public schools have borrowed $120,000 or more to finance law school. The average amount borrowed by private school graduates, of course, is already over $124,000. If you doubt these figures and you teach at a law school, you can ask your financial aid office how many of your graduating students have borrowed more than $120,000 to attend law school. The figure will be less than a third at some state schools with very low tuition, but it will be higher than a third at other public schools and most private ones.

But the amount borrowed is just the beginning. What does it mean to borrow $123,865 to finance law school? First, according to the federal counseling program, it means that you currently owe $133,869. About $10,000 of interest has accumulated just during law school. That debt level also means that you are continuing to accrue about $21 of interest a day. Since you’re unlikely to pay down any of your debt before completing the bar exam, another $2,184 of interest will accrue between now and then.

Exit counseling also advises that, if you attempt to repay this loan on the standard ten-year plan, you will owe $1,579 per month. And here’s the kicker: The government program counsels that, using guidelines published by the Consumer Financial Protection Bureau, this student should find a job with a minimum gross income of $236,850 to support those loan repayments! Even the students who obtain those BigLaw jobs won’t gross that amount.

I know (and this student knows) that you can get by on less money than the consumer guidelines suggest. He also knows that there are repayment plans like Income Based Repayment and Pay As You Earn that will tie his loan repayments to his salary. But the numbers generated by this debt counseling program illustrate how outlandish law school debt has become.

Remember that we’re talking here about a scholarship student at a public law school, one who paid about $22,750 per year for tuition and $18,250 (a bit over 150% of the federal poverty level) a year for living expenses. If a student like that needs $236,850 in gross income–or even $100,000 in gross income–to pay off his debt, then law schools are enrolling students in a clear financial trap. We know that incomes like that aren’t available for the vast majority of our graduates. The median pay for all lawyers, including those who have worked 40 or more years, is $112,760 per year. How many lawyers reach that pay level within their first ten or twenty years after graduation, when they are repaying student loans?

How can we possibly maintain access to the legal profession at these prices? How can we provide justice for clients? How can we in good faith enroll students in programs that will leave them financially strapped for years–or dependent upon taxpayer goodwill for reduced payment programs? How can we, as scholars who value public policy, impose those costs on the public?

We can’t. There are four steps that we, as law schools, should pursue aggressively to address this unconscionable situation: (1) Dramatically lower tuition, whatever that takes. (2) Restructure law school so that students can work close to full-time while completing their studies; there’s no other way to cover post-college living expenses for adults who choose not to live with their parents (or don’t have that option). (3) Publicize very clearly how much graduates will earn from average jobs after making average loan payments. (4) Lobby Congress to guarantee reduced payment plans like IBR and PAYE for loans that have already been disbursed, but to repeal those programs for professional students going forward. Those programs were never designed for professional students, and they are coninuing to inflate the cost of professional education. As a policy matter, the money would be better spent on almost any other line in the federal budget.

Meanwhile, the students I’ve talked to can’t spend too much time worrying about their debt: they’re still looking for jobs.

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Obama’s Budget and Student Loans

April 17th, 2013 / By

President Obama’s 2014 budget has two proposals that could affect law students who rely on federal loans. First, the President has proposed eliminating taxes on loan debts that are forgiven. Second, the proposed budget would change interest rates on student loans. Here’s more detail about both proposals, as well as an important caveat about the politics of educational loans and professional students.

Taxation of Forgiven Debt

The Department of Education offers several programs that allow law graduates to reduce their monthly debt payments. Both Income Based Repayment (IBR) and Pay as You Earn (PAYE) link repayment amounts to salary, capping payments to a percentage of the graduate’s discretionary income. The programs also forgive any remaining debt after 10 years (for graduates working in public service), 20 years (under PAYE), or 25 years (under IBR). For graduates falling in the first category, those working in public service, the value of the forgiven debt is not taxable. But for graduates in either of the other two categories, that value is taxable.

Taxation of the forgiven debt makes IBR and PAYE less attractive to graduates–especially those, like law students, who may still owe substantial amounts when their debt is forgiven. These graduates face the grim prospect of concluding one series of loan repayments only to begin a second series of structured payments to the IRS.

Obama’s proposed budget would eliminate that burdensome prospect, insulating all forgiven student debt from taxation. If adopted, the change could relieve some anxiety about student loan payments, although twenty years of repayment is still a daunting prospect.

Interest Rates

Law students qualify for two types of federal loans. First, they may borrow up to $20,500 per year in unsubsidized Stafford loans; those loans currently carry a 6.8% interest rate. Second, law students may borrow additional sums as Grad PLUS loans; the latter loans carry a 7.9% interest rate.

Both rates are quite high compared to other interest rates. The interest rate on 10-year Treasury bills has been depressed for years; it was just 1.75% earlier this week. Fifteen-year fixed-rate mortgages currently impose just 2.55% interest.

Higher rates for student loans partly reflect their increased risk; there is no collateral for an educational loan. The rates, however, also reflect the fact that Congress fixes these rates by statute rather than allowing them to shift with changes in the T-bill rate.

The President’s proposed budget would adjust interest rates on student loans by pegging them to the T-bill rate. Unsubsidized Stafford loans would charge the T-bill interest rate plus 2.93 percentage points. Grad PLUS loans would charge the T-bill rate plus 3.93 percentage points.

At current T-bill rates, this proposal would lower interest rates for law students. Interest on the unsubsidized Stafford loan would fall from 6.8% to 4.68%; interest on the Grad PLUS loan would decline from 7.9% to 5.68%. Those are both significant cuts.

As T-bill rates rise, however, so will interest rates for students. The long-term average interest rate on 10-year Treasury bills is 6.61%. At those rates, law students would pay 9.54% interest on the first $20,500 they borrowed and 10.54% on additional amounts. And that’s just the average T-bill rate; rates could move even higher.

Note that, under the Obama proposal, the interest rate for any loan would be fixed at the time of disbursal; these would not be adjustable rate loans. So, if the proposal passes, students currently enrolled in school will obtain lower-interest loans than the ones currently available; so will future students as long as T-bill rates remain low. Interest rates will rise only for students who enroll and borrow in the future, assuming that T-bill rates return to historical averages.

Politics and Professional Students

The changes outlined above are just proposals; Congress may not accept them. Both changes will cost the federal government money, at least in the short term, and there’s not a lot of money lying around on Capitol Hill. It’s too early to celebrate possible relief for students who depend on educational loans.

Professional students, in fact, face a special risk in the political debate over these proposals. Congress may decide that the President’s proposals are necessary changes for college students, but not for professional students. Professional school graduates, after all, are supposed to earn high enough salaries to repay their loans and profit handily from their educational investment; that’s what law schools and other professional schools have been telling prospective students. Why, then, should Congress spend limited funds to assist professional school graduates?

Congress, in fact, might decide to do what it has done in the past: Help college students by cutting benefits for professional ones. In the 2011 Budget Control Act, Congress eliminated subsidized loans for graduate/professional students and used that savings to improve funding for undergraduates. The upcoming debate raises the same risk: Will Congress accept the President’s proposal, which would offer benefits to current law students? Or will it worsen conditions for graduate and professional students in order to ease debt loads for undergraduates?

Hat tip to TaxProf Blog for noting these important proposals.

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Accrued Interest

March 22nd, 2013 / By

Earlier this week, a student forwarded an email that he received from his federal loan servicer. After a perky “Hi,” the email reminded the student that interest accrues every day on unsubsidized educational loans. The email then spelled out his personal liability: He’s accruing $21.79 per day in interest. As he studies for his final law school exams, celebrates on graduation day, studies for the bar, and searches for a job, interest will accrue seven days a week. By November 1, when he hopes to have received good news of bar admission and obtained a job, he’ll owe another $4,881 for his law school education–just from interest accrued after today.

This student’s experience is not unusual. In fact, the interest gathering daily on his loan is lower than the interest accrued by many students. This student is an in-state resident at a public law school, and he received a three-year partial scholarship. During his first two years of law school, Congress subsidized some of his loans (meaning that interest did not accrue). Congress revoked that benefit for professional students last July, so 1Ls and 2Ls are gathering more interest than this 3L did. The interest does not compound until six months after graduation, but it accrues every day.

Paying jobs have declined during law school, and many students feel pressure to complete unpaid internships during the summer and academic term. Those factors, combined with rising tuition and living expenses, push law school loans ever higher. The interest rates on those loans, furthermore, are steep: 6.8% for the first $20,500 borrowed each academic year and 7.9% on anything above that amount. At those rates, daily interest charges mount quickly.

ABA and media reports about “average law school debt” don’t include this accrued interest. Law schools report only the amounts that their students borrow, not the full debt at graduation. The accruing interest falls through the gap because schools process only the initial loans, they do not handle interest charges or debt collection. This unfortunate circumstance means that both the borrowers and the schools may overlook the interest gathering daily.

Concern about that neglect seems to have motivated the email my correspondent received. The loan servicer wanted him to remember that interest was accruing daily on his loan, and that he could save money by paying the interest now. But how is a borrower supposed to pay interest while still collecting the loan? Should he borrow additional funds to service the interest? If funds were available at a lower interest rate, he would have tapped them before the student loan. The message suggests that students are partying with their money rather than studying for finals, worrying about the bar exam, and searching for jobs. For a law student, this type of message just ratchets up the anxiety.

I think it would be better to send these messages to law faculty. Imagine opening an email that read: “Hi! 185 of the third-year students in your law school have loans supporting their education. We want to remind you that these loans accrue interest daily. At your school, the average amount of daily interest is $21.79 per student. That’s $4,031 in interest accruing daily in your third-year classrooms. Accrued interest between now and graduation will exceed $200,000 for your class. Between now and August 1, when these students finish the bar, the collective total will be just over $536,000. That doesn’t include principal or interest accrued earlier in law school. Have a nice day.”

The messages, of course, could be customized by school. Average accrued interest and number of indebted students would vary. For some schools, the numbers would be lower. For many, especially large private schools, they would be much higher.

None of that accrued interest will come to law schools. Nor will it benefit the clients our graduates hope to serve. Interest payments support the work of loan servicers, including the profits they realize. They also compensate the government for the lost use of the loan money, forgiven loans, and defaulted loans. What a waste of our graduates’ assets. Our costly education programs require our students, not only to pay our hefty fees, but to shoulder high-rate interest that accrues daily.

It’s sobering to think how much interest accrues on student loans during each day that we teach, hand out exams, grade, or watch our students claim their diplomas.

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Rising Student Debt

March 6th, 2013 / By

Student debt has risen to unprecedented levels. The total approached a trillion dollars by the end of 2012, and the figure continues to rise steeply. According to a recent report from the Federal Reserve Bank of New York, student loans were the only type of household debt that continued to rise throughout the Great Recession.

Mortgage debt, which currently totals eight trillion dollars, still overshadows debt from student loans. But student debt now constitutes the second largest category of consumer debt, drawing the attention of economic forecasters.

Student debt provokes concern, not only because of its size, but because of increasing delinquency rates. Student loans now lead all other categories of consumer debt on non-payment: 11.7% of student loans are at least 90 days delinquent. Delinquency rates for student loans, furthermore, show a sharp upward trend (p. 9), while those for other types of household debt are declining.

Even those figures underestimate the looming shadow of student debt. As the Federal Reserve Report notes in footnote 2 of its report, “delinquency rates for student loans are likely to understate actual delinquency rates because almost half of these loans are currently in grace periods, in deferment, or in forebearance and therefore temporarily not in the repayment cycle.” The delinquency rate for student loans that have actually entered repayment is “roughly twice as high” as the 11.7% official rate. For more discussion of this issue, see this post on Liberty Street Economics, a blog authored by some of the economists working with the Federal Reserve Bank of New York.

So both student debt and delinquency rates on that debt are growing rapidly. What impact will those phenomena have on individuals and the economy? No one knows for sure, because our economy has no experience with student debt of this magnitude. The mechanics of student loans–which feature private and government lenders, deferral periods, and changing repayment plans–are also more complicated than other types of household debt.

Recent analyses by the economists at the NY Federal Reserve Bank, however, raise red flags about the impact of student debt. The economists found that “the growth in student loan balances and delinquencies was accompanied by a sharp reduction in mortgage and auto loan borrowing and other debt accumulation among younger age groups.” These declines were “greater for student loan borrowers and especially so for those with larger student loan balances,” suggesting a causal relationship. Highly indebted graduates, in other words, seem to be deferring home and car purchases. Those decisions have implications for both the individuals and the economy.

Higher education is an engine for economic growth; it enhances the productivity of most workers. But what happens to the economy when educators claim an increasing share of that productivity? The growth in student loan debt reflects dramatic increases in tuition at colleges and graduate programs. Those increases mean that educators are demanding, up front, a larger portion of the productivity gains they help students achieve. Many of today’s graduates, especially those with high professional school loans, will spend half their working lives repaying those debts. Rather than using their full productivity gains to invest in houses, cars, or the educational future of their own children, they will send a significant portion of each paycheck to their educational creditors. We don’t know yet how that shift will affect the economy, but the early returns are troubling.

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