The impact of housing markets on consumer debt: credit report evidence from 1999 to 2012
We investigate the impact of large swings in the housing market on nonmortgage borrowing, including student, credit card, auto, and home equity debts. For this purpose, we use CoreLogic geographic house price variation, matched with rich data on consumer liabilities from the Equifax-sourced FRBNY Consumer Credit Panel. The length and timing of our panel allow us to study the consumer debt portfolio response to house price changes during a boom-and-bust cycle of historic magnitude as well as during more ordinary times. In first-differenced instrumental variables estimation, we find that during ...
The financial crisis at the kitchen table: trends in household debt and credit
Since the onset of the financial crisis, households have reduced their outstanding debt by about $1.3 trillion. While part of this reduction stemmed from a historic increase in consumer defaults and lender charge-offs, particularly on mortgage debt, other factors were also at play. An analysis of the New York Fed?s Consumer Credit Panel?a rich new data set on individual credit accounts?reveals that households actively reduced their obligations during this period by paying down their current debts and reducing new borrowing. These household choices, along with banks? stricter lending ...
Puerto Rico's Evolving Household Debts
Debt and its performance play a critical role in economic development. The enormous increase in mortgage debt that took place during the run-up to the 2007 financial crisis and the contribution of that debt to the crisis underscore the importance of household debt to financial stability and economic growth. While we regularly report on household debt at the national level and for selected states in our Quarterly Report on Household Debt and Credit, we have not reported separately on Puerto Rico. This post introduces metrics on household debt in Puerto Rico, which we plan to update regularly. ...
The Student Loan Landscape
Student loans have recently attracted a huge amount of attention from the press and policymakers. In this post, the first in our three-part series this week, we’ll use our Consumer Credit Panel dataset, a representative sample drawn from anonymized Equifax credit data, to describe the landscape of the outstanding U.S. student loan portfolio. Much of our discussion will address updates to several graphs that we’ve presented before, most recently in a 2014 staff report, “Measuring Student Debt and Its Performance”; readers can find more detail there. We’ll also update some earlier ...
Echoes of rising tuition in students’ borrowing, educational attainment, and homeownership in post-recession America
State average enrollment-weighted public college tuition and fees per school year rose by $3,843 (or 81 percent) between 2001 and 2009. How are recent cohorts absorbing this surge in college costs, and what effect is it having on their post-schooling consumption? Our analysis of tuition, educational attainment, and debt patterns for nine youth cohorts across all fifty states indicates that the tuition hike accounted for $1,628, or about 30 percent, of the increase in average student debt per capita among 24-year-olds between 2003 and 2011. However, estimates indicate no meaningful response to ...
Household Formation within the “Boomerang Generation”
Young Americans? living arrangements have changed strikingly over the past fifteen years, with recent cohorts entering the housing market at much lower rates and lingering much longer in their parents? households. The New York Times Magazine reported this past summer on the surge in college-educated young people who ?boomerang? back to living with their parents after graduation. Joining that trend are the many other members of this cohort who have never left home, whether or not they attend college. Why might young people increasingly reside with their parents? They may be unable to find ...
Have Consumers Been Deleveraging?
Since its peak in summer 2008, U.S. consumers’ indebtedness has fallen by more than a trillion dollars. Over roughly the same period, charge-offs—the removal of obligations from consumers’ credit reports because of defaults—have risen sharply, especially on loans secured by houses, which make up about 80 percent of consumer liabilities. An important question for gauging the behavior of U.S. consumers is how to interpret these two trends. Is the reduction in debts entirely attributable to defaults, or are consumers actively reducing their debts? In this post, we demonstrate that a ...
Understanding the Evolution of Student Loan Balances and Repayment Behavior: Do Institution Type and Degree Matter?
Student loan balances and delinquency rates have soared to unprecedented levels in recent years, forming what many commentators have termed a “student loan bubble” and creating a major public policy issue. Given the importance of student loans for human capital formation and economic growth, understanding student loans and repayment behavior is essential from a policy perspective. Yet research in this area has been limited. The authors seek to fill the gap by examining student loan performance over time by institution type and degree program. Using detailed data collected as part of ...
How Much Student Debt is Out There?
As is widely known, student loan debt has expanded significantly over the past decade or so and stands at historically high levels. But how much in total do students owe?
Do we know what we owe? A comparison of borrower- and lender-reported consumer debt
Household surveys are the source of some of the most widely studied data on consumer balance sheets, with the Survey of Consumer Finances (SCF) generally cited as the leading source of wealth data for the United States. At the same time, recent research questions survey respondents? propensity and ability to report debt characteristics accurately. We compare household debt as reported by borrowers to the SCF with household debt as reported by lenders to Equifax using the new FRBNY Consumer Credit Panel (CCP). Moments of the borrower and lender debt distributions are compared by year, age of ...