The combination of student debt–racked up when the housing bubble burst and people who could not find work, borrowed and returned to school—and credit card debt comprise the majority of Americans’ indebtedness. Consumers have become better at managing their credit card debt, and banks have pulled in the reins on handing them out, as the credit card debt is down 14 percent from 2008.
However, student loan debt climbed from $590 billion in mid 2008 to $1.26 trillion currently, which correlates with the 43 percent of those with negative net worth who are college graduates., Fourteen percent of U. S. households have credit card debt of over $10,000. A New York Federal Reserve report states U. S. households are $12.3 trillion in debt, up 10 percent from 2013 but 3.1 percent below the peak in 2008.
Housing debt has seen the greatest improvement since the recession. It’s over $1 trillion below its peak. Mortgages do not play a significant role, as only 19 percent of homeowners have negative net worth, compared to 75 percent of those with positive net worth.
The average age of those with negative net worth is 43, while it is 51 for the positive net worth clan. The average income of those in the minus category is $39,077, indicating the range goes from the very poor to the middle of the middle class.
Those with negative net worth are comprised of three equal subsections: One third are in the hole up to $12,500, mostly credit card debt; the second third owe up to $47,500, net of their assets; and the final third owe a net of $47,500+. The last two are dominated by student debt.
“The worry,” says Ben Steverman, “ especially in an era of stagnant wages, is that there might never be enough income, or enough time, to pay off those debts and start building real wealth.” ##
(Image credit:123rf.com–Heavy book bag)
