In case you didn’t get the memo from Goldman boss Lloyd Blankfein last week take note: Australians have it pretty good.
Research published on Friday by Westpac economist Elliot Clarke found US graduates saddled with growing amounts of debt thanks to high costs, lower starting salaries and fewer job opportunities.
US student debt is now at a level that “has the capacity to materially impinge on financial health and discretionary spending power”, Clarke reported.
Here’s how much student loans have added to US household debt since 2003:
Tertiary education is funded differently in the US than in Australia. Australia’s HECS-HELP scheme offers interest-free loans to eligible students.
According to the Department of Industry, Innovation, Climate Change, Science, Research and Tertiary Education, Australians had an average HECS-HELP debt of $16,000 last financial year and take an average of 8.4 years to repay their debt.
In contrast, the US Federal Student Aid program offers three types of loans at interest rates of 6.8%-7.9%, with delinquency rates rising from 6% last decade to 12% now.
“The accrual of student debt by US households over the past five years has been a spectacular, if often overlooked, macrofinancial trend,” Clarke reported.
“Should soft labour market conditions persist, as we expect them to, student debt will increasingly become a core concern, both on macroeconomic and social grounds.”
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