Student loan debt is low because this is the *average American debt.*
Only about 35% of Americans have a four-year college degree. And of the ~20mil American students enrolled in college, only about 25% of them are enrolled at private colleges, which tend to be the most expensive, the other 75% are enrolled in public colleges which *can* be expensive, but are generally less expensive for in-state tuition. Of course I've also written at length about discount rates before, and how even private or out-of-state tuition with high sticker prices ($50,000+) tend to have a high discount rate over 50%, meaning that the average student enrolled is paying less than half of the sticker price (this is one way that colleges have higher income students/families subsidize college for lower income students/families... Not praising this as a system that makes logical sense, it's just a fact of how financing in higher ed works).
Of course, there are still Americans who have college debt without having graduated, or who are full pay out of state tuition at a public college, or what have you, but this is why the average student loan debt is relatively low... $5000. BUt, for a country where about 65% of the population
does not have a college degree, $5000+ is much higher average debt than it should be. I mean, think about that. 320million Americans, and 65% of them don't have a college degree, but the average American has $5000 in student loan debt...? That's not surprisingly low, it's disappointingly high.
The data as its presented here seems kind of stupid. I agree with the mortgage debt complaint. If the average American mortgage debt is $35,000 then it gives an impression that "the average mortgage holder has only $35,000 left in debt!" or "wow, mortgages are far more affordable than I thought!" or something, which isn't useful.
Here's a ridiculous analogy for why the data presented this way is silly... remember when Sony unveiled the PS3 for $599 -- FIVE HUNDRED NINETY NINE dollars -- and people were shocked at the high sticker price in 2005? Well, if Sony followed that up by saying "We know that the PS3 has a premium price, but you might be surprised to learn that the average american will only spend about $0.03 on a PS3 in 2006." It's weird to spread out of an average price of something over hundreds of millions of people who do not buy that thing.
Why do you care about average mortgage balance value of only people who have mortgages?
Because it's a more accurate representation of mortgage balance. THis average as its presented factors in the 35% of Americans who rent and have never held mortgages into the "average mortgage balance," which ends up making the number seem smaller.
Let's say you're thinking about buying a house or planning for the future where you want to buy a house... If someone says to you "The average mortgage balance in the US is $220,000" versus "The average American has a mortgage balance of $35,000," those two things are worded very similarly, but with way different numbers. One is the average of all mortgages in the US, it gives you a solid estimate on what you could expect to save for a mortgage, the other is as if other people are taking on your mortgage balance for you.
It's like if you're worried about the cost of college and someone says, "Well, the average American only has $5,000 worth of college loan debt..." That would seem like college is not that expensive. $5000? Oh, ok, I can work with that for a college education. But that's because this $5000 number is factoring in the ~50%+ of Americans who didn't go to college into the average.
(* I'm just estimating average mortgage balance... don't really know what it is.. Avg american new home price is $320,000 nationally so just threw out $220,000 as a spitball somewhere, but the actual number doesn't really matter to my point that it's a lot higher than the other number. Also just estimating the 50% of Americans who didn't go to college, we know that about 35% of Americans have a four year degree, so I just took 65% and arbitrarily dropped 15% from that account for people who might have some college debt but never graduated, the actual numbers are definitely different but not pertinant to my overall point)
www.businessinsider.com
www.newyorkfed.org
