Americans’ debt is bigger than ever before — but the shape of that debt is very different from a decade ago.
Mortgage debt is actually down. Meanwhile credit card debt, student loans, and auto loans have increased by 45 percent since 2008, says a new study from loan marketplace website Lending Tree. Nearly all of that, though, is from student loans.
Record debt for consumers
By the end of this month, consumer debt will officially surpass our peak amount during the Great Recession.
The rate of our debt has been creeping up at about 3.4 percent every year since. In total, we’re set to hit $15.7 trillion at the end of June. Our total debts added up to $14.7 trillion 10 years ago. And none of that increased is attributable to housing.
Despite still making up our largest amount of overall debt, mortgage debt is actually down by 5.5 percent since 2008, when the U.S. was in a housing crisis. Auto loans are up 39 percent, and credit card debt has even gone done below 2008 levels. Our debts, excluding mortgages, are set to pass $4 trillion by the end of the year.
Talk to a certified consumer credit counselor today for an expert opinion on your best option to get out of debt.
A shift in debts
We’ve always been in debt, but the amount of each kind has shifted.
Student loans now make up 42 percent of all consumer debt, while credit card debt makes up 27 percent. The percentages of credit card and student loan debts have traded places over the past 10 years, with student loan debt then making up 27 percent, and credit card debt making up 40 percent. This shows a shift in Americans’ borrowing priorities.
In 2008, homeowners had limited to no equity in their homes. Now homeowners have significantly more value in their homes.
We’re using less of our income for credit card debt now, too. We now use 7 percent of our income toward our credit card balances, down from 10 percent in 2008.
The debt that now eats up most of our disposable income — aside from mortgages — is student loans. Americans now use 10.3 percent of disposable income on these debts, compared to 6 percent a decade ago.
Student loan debt in America
Debt.com has reported before that student debt is a national crisis with no sign of slowing down. Lending Tree’s research reinforces that analysis.
Student loan debt has passed the $1.5 trillion mark, and has increased by 130 percent since the housing crisis. The amount the typical borrower owes for their student debt is 70 percent more than it was in 2008.
The burden of student loans is making work stressful for the youngest and largest generation in the workforce.
Seventy-five percent of millennials stress daily over their student loans, and half have taken jobs they don’t like to help pay them back, according to previous Debt.com reporting. There are 45 million student loan borrowers in the U.S., and each owes $27,975 on average.
Most borrowers are unaware of how their loans work. A study from advice site Student Loan Hero found that 52 percent of borrowers are unaware that their federal unsubsidized loans accrue interest while they are in college. One in 10 don’t know they have to pay their loans back — even if they can’t find a job after college.