Crossposted from the Milwaukee Journal Sentinel. This opinion editorial originally ran on May 14, 2015 online. As millions of students and their families across the country celebrate graduation season, many will be joining the ranks of the more than 40 million other Americans on the hook for over $1.2 trillion in student debt. The average […]
My name is Rohit Chopra, and I serve as an Assistant Director at the Consumer Financial Protection Bureau (Bureau), where I lead an office that focuses on issues facing students and young Americans. In 2011, I was also designated by the Secretary of the Treasury as the Student Loan Ombudsman within the Consumer Financial Protection Bureau, a new role established by Congress in the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Thank you to President Jim Bullard and everyone at the Federal Reserve Bank of St. Louis for inviting me to speak today on the impact of rising student debt on the balance sheets of young American households. As the name of St. Louis Fed’s Center indicates, household financial stability is a key ingredient to the health of our economy and financial system. First, I will outline some of the distressing debt and wage trends among young Americans. I will then discuss some of the striking structural similarities between the mortgage and student loan markets, particularly in the years leading up to the crisis. Finally, I will argue that we must resist the temptation to address these concerns solely through an education policy lens, when, in fact, they may require very significant attention from financial regulators and the financial services industry.
The Consumer Financial Protection Bureau estimates that outstanding debt is approaching $1.2 trillion as of May 2013. We also estimate that student loans guaranteed or held by the federal government have now crossed the $1 trillion mark.
By holding today’s hearing, it is clear that many of you are keenly interested in finding solutions for some of the troubling trends in the student loan market.
While many in Washington are focused on what loans look like for future borrowers, there may be a domino effect on the broader economy if we ignore borrowers currently stuck with high student loan payments.
Financial institutions expect borrowers to hold up their end of the bargain when it comes to mortgages and student loans. Shouldn’t we expect the same of them?
For millions of Americans, student loans have opened doors to a college degree — offering new opportunities to create a better, more secure life. But student debt has been growing rapidly, and many borrowers are struggling to stay afloat.
Written Testimony of Rohit Chopra Before the Senate Committee on Banking, Housing, and Urban Affairs
For millions of Americans, student loans have opened doors to a college degree— offering new opportunities to create a better life. But the rapid growth of student debt raises concerns that warrant significant attention of policy makers and regulators.