Saturday, May 11, 2013
- New York Times, Student Debt Slows Growth as Young Spend Less
- Wall Street Journal, Cutting Down Student Debt Obama Plan Would Ease Burden, but Critics Say It Could Promote Overborrowing
- Matt Leichter, I Attempt to Match the Times’ Non-Reporting:
[The New York Times] article states that the average ... debt-to-income ratio for households under 35 has grown from 1:1 to 1.5:1 between 2001 and 2010. How lifetime earnings can rise while the young ... are spending more on debt service is unexplained. ... [C]ollege-educated Americans make less money than they used to.
To be fair, though, I’m going to give a little credit to the Times because people’s incomes would be higher if the economy were at full employment, and it’s not. In other words, it’s unlikely structural degree oversupply is the primary force depressing college graduates’ earnings. Thus, the 1.5:1 debt-to-income ratio should be lower than it is. But just when exactly will college graduates in their 20s and early 30s “make up for lost ground” after their prime earning years? The Times doesn’t say.