The average student debt held by US families in the top income and net worth quintiles increased between 2019 and 2022, according to a new report from the Federal Reserve Bank of Cleveland. Families with student debt in the top income quintile owed more than $75,000 on average as of 2022, up more than $20,000 since 2019, in 2022 dollars. During that same time frame, average student debt fell for each of the other four income quintiles, according to the report, which is based on the latest data from the Federal Reserve Board’s Survey of Consumer Finances.
The trend is similar for high-net-worth families with student debt: The top quintile owed more than $60,000 in 2022, up about $20,000 since 2019; meanwhile, the three middle quintiles posted much smaller increases, and the bottom quintile showed a decrease.
The analysis was partly motivated by the COVID-19 pandemic and policy responses related to student debt, most notably a “payment pause” that applied to most federal student loans from March 2020 through August 2023.
The findings may have implications for social scientists and policymakers, given recent discussions about student debt cancellation policies, according to the report’s authors, Cleveland Fed research economist Thomas Phelan and William & Mary assistant professor of economics Emily G. Moschini. “The more student debt balances are positively correlated with measures of ability to repay (such as income and net worth), the lower the welfare gains of debt cancellation are likely to be,” they write.
Read the Economic Commentary: The Evolution of Student Debt 2019–2022: Evidence from the Survey of Consumer Finances
The Federal Reserve Bank of Cleveland is one of 12 regional Reserve Banks that along with the Board of Governors in Washington DC comprise the Federal Reserve System. Part of the US central bank, the Cleveland Fed participates in formulating our nation’s monetary policy, supervises banking organizations, provides payment and other services to financial institutions and to the US Treasury, and performs many activities that support Federal Reserve operations system-wide. In addition, the Bank supports the well-being of communities across the Fourth Federal Reserve District through a wide array of research, outreach, and educational activities.
The Cleveland Fed serves an area comprising Ohio, western Pennsylvania, eastern Kentucky, and northern West Virginia.
Chuck Soder can be contacted at chuck.soder@clev.frb.org or at 216.672.2798.
