Student loan data gap hinders government understanding of risks to economy, official says

Tim Goral's picture
Wednesday, November 20, 2013

The lack of reliable data on the $1.2 trillion student debt market may be hampering federal officials’ understanding of how student debt threatens economic growth, a top regulator said Monday.

Financial regulators, federal policymakers at the Treasury Department and Federal Reserve, and select bank chief executives who advise the Fed have been warning for several months that large unpaid student loan balances may jeopardize the economy in the coming years as bigger chunks of household paychecks go towards repaying college debt instead of buying new goods and services, investing in small businesses or saving for retirement.

But authorities lack a full understanding of how student debt affects financial decisions and how future problems in repaying student loans may impact other parts of the economy because the student loan market is “quite opaque,” according to Rohit Chopra, Consumer Financial Protection Bureau assistant director and student loan ombudsman. Issues Chopra said "are not well understood" include why some borrowers repay loans faster, why they fall behind on their loans, and reasons for default.

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