The Consumer Financial Protection Bureau reported late Wednesday that Americans owe more on student loans than previously thought. Total student debt outstanding appears to have surpassed $1 trillion towards the end of 2011. In February, the Federal Reserve Bank of New York estimated the amount to be $867 billion, based on data provided by the Equifax Inc. (NYSE:EFX) credit bureau. In comparison, the total amount outstanding on credit card balances is about $800 billion.
“Young consumers are shouldering much of the punishment in the form of substantial student-loan bills for doing exactly what they were told would be the key to a better life,” Chopra, the bureau’s student-loan ombudsman, said. According to FinAid, college tuition increases an average of 8 percent a year, meaning the cost of tuition doubles every nine years. With high levels of unemployment and stagnant wage growth, many students rely on debt to attend college.
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Chopra also believes that student debt is affecting the housing market. She said, “First-time home-buyers are a substantial part of the housing market. Instead of saving for a down payment, these borrowers are sending big payments every month.” Borrowers are already having trouble keeping up with student loan payments, let alone saving for a large down-payment on a house. New York Fed data shows that about one in four student borrowers that have started repaying their loans are behind on payments.
In afternoon trading, education related stocks were mixed. Shares of Capella Education Co. (NASDAQ:CPLA) and DeVry Inc. (NYSE:DV) dropped more than 1 percent. Apollo Group, Inc. (NASDAQ:APOL) and Career Education Corp. (NASDAQ:CECO) both edged .80 percent and .50 percent lower, respectively. Meanwhile, shares of ITT Educational Services, Inc. (NYSE:ESI) gained about .60 percent.
Apollo Group, Inc. will unveil its latest earnings on Monday, March 26, 2012. Through its subsidiaries, Apollo Group offers innovative and unique educational programs and services both online and on-campus at the undergraduate, graduate, and doctoral levels. The average estimate of analysts is for net income of 39 cents per share, a decline of 53 percent from the company’s actual earnings for the same quarter a year ago. During the past three months, the average estimate has moved down from 44 cents.
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