The amount of outstanding U.S. student loan debt hit $1.465 trillion in November 2018, more than double the $675 billion figure at the end of the recession in 2009. Some experts have expressed concern that the record figure could carry severe risks for the economy.
“Over 90% of student loans are guaranteed by the U.S. Department of Education, meaning that if a recession causes a rise in youth unemployment and triggers mass defaults, this contingent liability could prove burdensome for the U.S. government budget,” Paul Della Guardia, economist at the Institute of International Finance, told Bloomberg.
According to Bloomberg’s analysis of student loan securitization data, students who took out loans in 2012 are still reeling from the effects of taking that action. “Loans disbursed in 2012 have defaulted at a faster rate than any other loan cohort since the financial crisis,” Bloomberg reports. The analysis discovered that these borrowers—who entered the labor force when the unemployment rate was double what it is currently—have struggled with making monthly payments and finding a career.
Of the more than 40 million Americans who have taken out student loans, 2.7 million borrowers owe more than $100,000, according to the U.S. Department of Education. 700,000 Americans owe $200,000 or more.