By Sam Gurdus
Both household and national debt are rising in the face of the economic crisis brought on by the coronavirus.
According to CNN, collectively, Americans are responsible for a record $14 trillion of debt. Over time this problem isn’t getting any smaller. In fact, CNN reports that household debt has grown roughly ”25% from the post-recession low of $12.7 trillion.” This troubling statistic helps to illustrate how serious this issue is.
Potential solutions have been proposed to address the huge household debts. Sen. Elizabeth Warren addresses student loan debt in The Student Loan Fairness Act. If passed, it would take action by bringing about “student loan forgiveness, caps on interest rates on Federal student loans, and refinancing opportunities for private borrowers.”
Similarly, according to Forbes, if elected, Joe Biden promises to reduce complications surrounding “income-based repayment for federal student loans” and lower monthly payments.
Taking a more direct approach to eliminating student loan debt, Sen. Bernie Sanders stated that if he became president, he would “cancel all student debt” and “make public colleges and universities tuition free.”
These approaches all aim to solve the same problem, but, while it is a major issue, student loan debt isn’t the only topic to cover. Another type of debt that weighs down Americans is mortgage debt.
Figures from the Federal Reserve Bank of New York show that, as of June of 2019, U.S. mortgage/housing debt had reached a total of $8.94 trillion. This staggering number proves that student loans are not the only type of debt that affects Americans.
It’s not just the citizens’ debt that is growing, however. As the government takes steps to lessen the economic impact of the coronavirus on businesses, they also are racking up debt. According to The New York Times, experts expect the U.S. to increase its budget deficit to 10-13% of the GDP. For reference, the previous post-World War II deficit record, in 2009, reached “9.8 percent of [the] G.D.P.” These numbers show that the U.S. debt is only getting worse.
Economic experts are concerned about the U.S.’ debt crisis. Speaking on the national debt, Federal Reserve Chair Jerome Powell said: “The federal budget is on an unsustainable path with high and rising debt … I remain concerned that the high and rising federal debt can … reduce productivity and overall growth.”
Featured image (at the top of this post): Man hands over debit card.
PHOTO CREDIT: Pixabay / Pexels