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21
THE COST OF
STUDENT DEBT
JPMorgan Chase reports that student debt
has doubled in the past 10 years to $1.5 trillion
in 2018—second only to mortgage debt—and
impacts 45 million borrowers.
"Although the financial returns from
a higher education degree over a lifetime
typically exceed the costs, roughly 22%
of student loan borrowers are in default,"
the report said. Among the findings by
JPMorgan Chase was that the average family
pays a median of $179 per month in loans of
take-home income in months with positive
payments. Nearly a quarter of families spend
more than 11% of their income on student
loans.
While noting younger borrowers, those
between 18- and 24-years-old, collectively
have the most student debt, it is those within
lower-income families that have the most
trouble making consistent payments.
e study revealed that 44% of homebuyers
who earn less than $50,000 annually make
positive payments to their loan. at number
increases to 52% for those earning between
$50,000–$1000, and 63% for borrowers who
make more than $100,000.
Also, families with multiple loans paid
their student loan bill more inconsistently
than their mortgage or auto loan. e report
states that families who pay their loans
between 90–100% of the time, make payments
on their student loan debt 54% of the time,
compared to 64% for their mortgage.
ose borrowers also pay their auto loan
62% of the time, and just 56% pay their student
loan bill consistently.
Reports show that student loan debt has
already been impacting the housing market,
including a report out of Dallas and WFAA,
which delves into how growing debt is making
it harder for borrowers to buy a home.
"From a practical perspective, somebody
coming out of school with heavy student loan
debt may simply not qualify for a conventional
loan," said Rick Sharga, Founder, President,
and CEO of CJ Patrick Co., a California-
based real estate and financial services
consulting firm.
Sharga added that millennials came into
the market after the Great Recession, many of
which had record levels of student-loan debt,
and into a market with no jobs.
"e notion of them being able to pay
back that student loan debt in any reasonable
period of time was pretty much a fantasy,"
Sharga said.
