Student loan debt spikes 243% in Bay Area in 15 years
SAN FRANCISCO (KTVU) - When you factor in inflation, total student debt in the San Francisco Bay Area increased by 243 percent over the last 15 years.
What’s more, between 2003 and 2018, the percentage of adults with student loan debt nearly doubled from 6.2 percent to 12.2 percent.
The sobering look at student loan debt is part of a new report: “At What Cost? Student Loan Debt in the Bay Area,” which provides an in-depth look at student loan borrowing and repayment in the nine-county Bay Area.
“These findings are stark, upsetting, and impossible to ignore,” said San Francisco Treasurer José Cisneros. “We must work collectively to provide relief for struggling student loan borrowers and strive for a future where higher education is affordable for all.”
In San Francisco alone, there are more than 100,000 people still paying off student loans, collectively carrying a balance of more than $220 million, according to the report.
The report also found that 1 in 6 San Franciscans have defaulted on these student loans in the past 15 years – and the areas with most borrowers in financial distress are low-income residents and communities of color.
The report is being presented Tuesday at the Bay Area Student Debt Summit where Cisneros, David Erickson of the Federal Reserve Bank of San Francisco, Vince Matthews, superintendent of the San Francisco Unified School District, as well as researchers, advocates and policy makers will discuss the problem and possible solutions.
“This report provides new insights on student debt in the Bay Area, along with recommendations for community leaders to help reduce the burden on individuals already struggling to maintain financial stability in our area,” said contributing author to the report, Bina Shrimali, of the Federal Reserve Bank of San Francisco.
The timing of the summit comes as Democratic presidential candidate Sen. Elizabeth Warren on Monday unveiled her plan to cancel almost all student loan debt for 42 million Americans.
Under Warren’s plan, each person’s student loan debt would get a relief of $50,000 if household income is up to $100,000. Higher incomes would also be entitled to massive debt reductions, while only those households with earnings of over $250,000 would get no student debt reduction.
Student loan debt in the U.S. now exceeds $1.4 trillion, tripling in the past decade.
More than 1 million borrowers go into default each year, and cumulative default rates are projected to reach as high as 40 percent by 2023, according to the San Francisco Office of Financial Empowerment and the Federal Reserve Bank of San Francisco.
Other key report findings include:
• In predominantly Black and Hispanic neighborhoods, 19.9 percent of borrowers are delinquent, 15.3 percent are in default, and 26.9 percent have defaulted since 2003.
• Borrowers in low-income neighborhoods experience high rates of delinquency and default. Twenty percent of borrowers in the lowest income neighborhoods are delinquent on their loans.
• Borrowers with low student loan balances experience high levels of delinquency and default.
• Approximately half of all Bay Area student loan borrowers in default owe less than $15,000, and nearly one in five defaulted borrowers owe less than $5,000.