FINRA Reports on Student Debt Study

FINRA reported findings from a Global Financial Literacy Excellence Center study on student loan debt. The study examined the implications of student loan debt for borrowers and the overall economy.

FINRA stated that the Global Financial Literacy Excellence Center ("GFLEC") study used data from a FINRA Investor Education Foundation 2015 National Financial Capability Study. The GFLEC was founded in 2011 at the George Washington University School of Business.

Findings include:

• outstanding student debt has nearly doubled in the last decade, increasing to $1.3 trillion from $240 billion in 2003;

• approximately 37% of respondents with student debt have reported being late with a student loan payment at least once in the last 12 months;

• student loan debt is concentrated among younger borrowers – approximately 45% of people aged 18 to 34 have student loans, compared to 27% for ages 35 to 54;

• some racial minorities (African Americans and Hispanics) and low-income borrowers are more likely to fall behind on loan payments;

• among the almost 30% of student loan holders who do not complete their degrees, a majority report serious problems repaying their debt, with approximately 53% of this group reporting that they had been late with a payment at least once in the previous year;

• many students with low incomes fail to take advantage of existing programs that could help repay their loans – slightly more than a third of borrowers say they have income-driven repayment plans, and approximately one in five said they did not know whether their loan payment amounts were determined by their income; and

• 39% of borrowers who estimated their loan payments prior to obtaining their student loans said they would make the same moves again, compared to only 24% of those who did not make these estimates.

President of the FINRA Investor Education Foundation Gerri Walsh expressed that "[t]he Foundation hopes this data will be used by policy makers, elected officials, consumer advocates and others to determine how to best help individual borrowers overcome the financial, psychological and emotional impact of student loan debt, and improve the financial capability of all Americans, especially the young."