All Americans are familiar with debt, from car loans to credit cards to mortgages. But according to a recent analysis by the Federal Reserve Bank of New York, one type of debt dominates the others for households with negative wealth.
High amounts of student debt are driving more American households into negative wealth—when a household’s total debt exceeds its assets—according to a report on the analysis.
An estimated 14 percent of American households have negative wealth. Yet, the breakdown of debt between households with negative and non-negative wealth is striking.
For households with more than $47,000 in negative wealth, student loans accounted for nearly half of all debt. Student loans also make up about 40 percent of debt in households with between $12,500 and $46,300 of negative wealth. By contrast, student loans make up less than 10 percent of all debt in households with non-negative wealth.
“It is likely that the steady growth in student debt and borrowing, combined with the very slow rate of student loan repayment we have documented elsewhere, has materially contributed and will continue to contribute to negative household wealth and wealth inequality,” a blog post about the study said.
Demography is one notable factor to come out of the analysis. Compared to non-negative wealth households, people who head negative wealth households are more likely to be single parents, minorities or women.
Single mothers head 24 percent of negative wealth households, while they make up only 8 percent of households with non-negative wealth. Black and Hispanic households account for 24 percent of negative wealth households, yet they are 17 percent of non-negative wealth households.
Approximately 43 million Americans have student loans, now totaling more than $1.3 trillion. About one in seven borrowers have defaulted on their loans, according to the Federal Reserve Bank of New York.
This post was written by Bloomberg BNA data reporter Madi Alexander.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)