Sunday, October 1, 2017

Tale of Two America's...Student Debt

The chart below shows the 15-24yr/old total US population (green line), post-secondary students (purple line), federal funds rate (black line), and federally supplied student loan debt (red line) from 1950 through 2016.  No shock, in the absence of population growth, interest rates are cut to incent higher utilization of debt.

Three clear periods;
1950-->1980 High population growth coupled with high student growth...minimal debt growth.
--College Age Population +19.3 million
--Post Secondary Students +6 million (likely more, data starts from '65)
1980-->2010 Minimal population growth and high student growth...rising debt growth.
--College Age Population +1.1 million
--Post Secondary Students +9 million
2010-->2016 Period of declining population and declining student growth...coupled with a massive rise in Federally provided uncollateralized loans which are permanently non-dischargeable for these young adults.
--College Age Population <0> million
--Post Secondary Students <1> million

No surprise record numbers of foreign students are being wooed and enrolled (nearly 1 million) but even this is inadequate to stop the declining total numbers of students.  Still, the impact of a declining quantity of 15-24yr/old potential students will negatively impact post secondary school attendance.  This will be particularly felt in states with depopulation that are primarily reliant on in-state students.

Add to this picture that the number of post-secondary schools has been steadily rising and the cost of college skyrocketing...and where is this going?  The chart below shows the Census data for the college age population is set through 2030 (since the population already exists...and it's just a matter of moving that 0-14yr/old population plus anticipated immigrants into young adulthood).  From there, the chart shows medium and low Census estimates...plus the dashed line showing the most probable outcome, a continuation of the current trend.