Kids @ Home Posts from the What's KICKin' Blog by Fran Kick

Student Loans Worry Students, Families, and the Fed

Student loans have received considerable media attention in recent months as researchers and policymakers voice growing concern about the heavy debt loads assumed by students and their parents. Now the Federal Reserve Bank of New York has announced via Grading Student Loans that since student loans have grown to be such a huge part of the consumer debt landscape, they’ll be providing quarterly data–detailing the demographics of borrowers–on the Liberty Street Economics Blog.

How big a problem is student debt? Very big. As of the third quarter of 2011, the outstanding balance on student loans ($870 billion) exceeded the outstanding balance on credit cards ($693 billion) and auto loans ($730 billion). That’s big.
—Cheryl Russell, Demographer and Editorial Director of New Strategist Publications

Wonder when colleges will start to be concerned? Students seem concerned as do recent college graduates given they’re:

Moving less (and moving back home more)

Not getting married

Having fewer children

Spending less

Perhaps those trends will turnaround as the job market improves? Hope so, or we might see student loan delinquencies higher than anyone would have thought possible.

$226,920.00 to Raise a Child (excluding college)

How much to raise a child today you ask? Well, the U.S. Department of Agriculture released its annual report, Expenditures on Children by Families, finding that an average middle-income family* with a child born in 2010 can expect to spend about $226,920.00 ($286,860.00 given an estimated annual inflation of 2.6 percent factored in) for food, shelter, and other necessities to raise that child over the next 17 years.

The good news is that this represents only a 2 percent increase compared to 2009. Which according to economist Mark Lino, who who oversees the annual report and serves as the Senior Economist for the USDA’s Center for Nutrition Policy and Promotion, is below the average increase for the past 10 years which has been 3.2 percent. Lino attribute the lower increase due to the cost of housing and clothing declining a bit. “The economy has taken a downturn so people are cutting back on some items. They may not be buying expensive sneakers,” Lino said. (Nike take note?)

This is the 50th year the USDA has issued its annual report on the cost of raising a child. FYI: In 1960, the first year the report was issued, a middle-income family could have expected to spend $25,230 ($185,856 in 2010 dollars) to raise a child through age seventeen.

You can check out the USDA’s Cost of Raising a Child Calculator to estimate how much it will annually cost to raise a child.

*Nationally, for this report the USDA defines an “average middle-income family” as earning between $57,600.00 to $99,730.00 in annual before-tax household income. The report covers expenditures for major budgetary items estimated in this study consisting of any direct parental expenses made on children through age 17. These expenditures exclude college costs and other parental expenses on children after age 17.