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September 20, 2016

If Student Loan Debt Is a 'Crisis,' What Does That Make Mortgage Debt?

 

Last week, Democratic presidential nominee Hillary Clinton tweeted, “When 40 million Americans are facing the same problem, that’s a crisis.” 

Clinton was referring to student loan debt, which, like the national debt, has exploded under President Obama. 

The National Student Loan Debt Clock puts the current debt level at $1.38 trillion—nearly double the $706 billion it was when Obama entered office.  

Hey, hasn’t federal debt also nearly doubled during Obama’s presidency?  Yes: Total federal debt was $11.1 trillion in January 2009 and is currently about $19.4 trillion, according to the St Louis Federal Reserve Bank.  

Does Hillary think total federal debt is also a crisis? 

Of course, her tweet didn’t address the amount of student loan debt, just that 40 million Americans—that’s 25.5 million (or 19%) households—had some level of student debt. 

And so Hillary wants to bail out most or all of these individuals with taxpayer money. 

But if student debt is a crisis, then what about mortgage debt? Nearly 50 million households have mortgage debt—almost twice the number of households with student debt—totaling $8.25 trillion. In other words, total mortgage debt is more than six times total student debt

And the levels are much higher: an average of $48,172 per household with student debt vs. $168,614 for mortgage debt.  

So if student debt is a crisis, then why isn’t mortgage debt a catastrophe—especially considering how many more families owe so much more money? 

And auto loans aren’t far behind student debt. Some 39 million households have auto loans, totaling about $1.06 trillion. If student loan debt is a crisis, then shouldn’t auto loan debt be considered a mini-crisis? 

Hillary might claim there’s a difference. But in both cases, people voluntarily took out loans for something they valued and thought they could repay with future earnings. 

To be sure, there is a student loan problem, but the government induced millions of students to take out loans far in excess of their ability to repay—just as it induced millions of Americans to take out home mortgages much larger than they could afford. So to the extent there is a problem, the government caused it. 

Now Hillary wants to fix a largely government-created problem with a government-imposed solution, guided mostly by a shameless ploy to buy the millennial vote.


 

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