On Tuesday, the Brookings Institution, with a David Leonhardt column at the New York Times serving as its de facto press release, published a study (full PDF here) entitled, "Is a Student Loan Crisis on the Horizon?" Unsurprisingly, their finding, in one word, was "No." Their more qualifed finding: "[I]n reality, the impact of student loans may not be as dire as many commentators fear." Their underlying "logic": "typical borrowers are no worse off now than they were a generation ago."
It's bad enough that much of the data presented by Beth Akers and Matthew M. Chingos, the study's authors, directly contradicts the sunshine they're trying blow up our keisters. What's even worse is that you don't even need to dig into the detail once you learn which year's data they used — 2010. For heaven's sake, guys, total student loan debt has grown by between 50 percent and 60 percent since then.
The following graphic from the Federal Reserve of New York shows what student loan balances were over four years ago in the first quarter of 2010:
In just four years, those balances have grown to $1.2 trillion, as seen in this quote from a Bloomberg News report earlier this month:
Democrats have argued that the $1.2 trillion worth of outstanding student-loan debt retards economic growth as young college graduates are forced to postpone home buying or other purchases.
Whether or not the increase is roughly 50 percent or 60 percent depends on whether private student loans are included in the $1.2 trillion Bloomberg cited.
With all due respect, you don't have to be a Democrat to make the argument noted at Bloomberg — though it is useful that the wire service cited Democrats. After all, the four-year, 50 percent to 60 percent explosion in loan balances has occurred under President Barack Obama, who, with the virtually unanimous support of Democratic politicians and the eager assistance of college administrators and aid officials, has openly encouraged college attendees to borrow as much as they can for as many years as they can, and has done little to respond to the fact that the financial prospects for many of those who graduate from college are nowhere near as favorable as they once were.
For a thorough, well-done takedown of Brookings' work at a detailed level, go to Choire Sicha's post ("That Big Study About How the Student Debt Nightmare Is in Your Head? It's Garbage") at the Awl (HT Instapundit).
I'll add one point to Sicha's work, namely that the only reason the authors can point to loan payments as a percentage of income holding steady is a statistic they cited, namely that the average term of a student loan went from 7.5 years to 13.4 years during the study period's 18 years. That's nothing to brag about. That's like claiming that a family with almost 30 years remaining on their mortgage is no worse off than a different family with the same household income and an identical monthly house payment which has only 15 years remaining on theirs.
But really, all you need to know is that student loan balances are about 50 percent to 60 percent higher than they were four years ago, and that the Brookings study — and David Leonhardt's promotional piece at the Times — just blew that off. Come back when you can present your work using current data, guys.
Cross-posted at BizzyBlog.com.