The Federal Reserve of New York publishes a quarterly report of "household trends in borrowing and indebtedness." The latest report, released this month, offered insight on 2013's first quarter on several levels, including student loans, where Washington, D.C., emerged as both deep in student loan debt and relatively above water in paying off such debt.
Unemployment rates fell in 40 states and the District of Columbia in April, and the Household Debt and Credit Report from the Fed indicates that household debt decreased by $110 billion in the first quarter of 2013.
However, when it comes to nationwide outstanding student loan debt, the numbers are less encouraging -- it increased $20 billion to $986 billion in the first quarter, and while delinquency rates improved across the board, delinquency still remains the highest for student loans at 11.2 percent.
The Household Debt and Credit Report demonstrated that there is "regional heterogeneity" in student loan balances -- the highest average balances were found in the Northeast and the South -- and the percentage of each state's population with active student loan debt varies considerably, as well.
With just over 25 percent of District's population with student loan debt, Washington, D.C., tops the list. D.C. also has the highest average student debt in the country at $41,230, while the national average is $24,810. Neighbors Maryland and Virginia are positioned at about $28,000 and $26,000, respectively.
The good news is that while the percentage of loans may be the highest in the District, they are being paid off. The data on student loan balances at 90-plus days delinquent indicates that D.C. is comfortably positioned at 7.3 percent, compared to the national average of 11.7 percent. The highest delinquent percentage is in West Virginia at nearly 18 percent, and the lowest is in South Dakota -- just over 6.5 percent.
Debate on Student Loan Rates
The information on student loan debt comes as Congress and the White House debate student loan rates. On Thursday, the House of Representatives voted to approve Republican-backed legislation "to allow interest rates on federal student loans to rise or fall from year to year with the government's cost of borrowing, ending a system in which rates are fixed by law," reports The Washington Post.
The Obama administration has threatened to veto the measure if it moves beyond the Senate, where it will likely first face challenges from the Democratic majority. Congress has until July 1 to decide what to do with student loan rates -- if no change is made to policy by that date, certain new loans for undergraduates with financial need will see doubled rates from 3.4 percent to 6.8 percent.
Two Sides of the Coin
The data from the Federal Reserve of New York has both positive and negative takeaways. While students are heading to the college despite economic uncertainties and the District's economy saw a rise in its job sector, one can't remain oblivious to the high price tag of education in D.C.
In a press release, Mayor Vince Gray said, "The District's economy is continuing our recovery from the effects of the recession, and continued strong growth in our private sector is driving our drop in unemployment. Nonetheless, I continue to be concerned about the negative effects of sequestration and the drag on our overall economic growth created by the uncertainty surrounding the federal budget and federal jobs."
- Politics & Government
- student loans