State of Student Aid in Texas – 2021

Section 11: Consumer Debt

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Total U.S. Consumer Debt Reaches $14.3 Trillion, Student Loan Debt $1.5 Trillion

Total U.S consumer debt – including mortgage, credit card, student loan, auto, and other debt – reached more than $14.3 trillion by the third quarter of 2020. This is an increase of about $5.3 trillion since 2004. Mortgage debt is the largest form of consumer debt, at nearly $9.9 trillion by the third quarter of 2020. Debt spiked leading up to and during the economic recession a decade ago, but total consumer debt reached even higher levels than that in 2020.

Total U.S. Consumer Debt Balance and Mortgage Debt Balance in Trillions of Dollars, Over Time, 2004-2020*

Total U.S. Consumer Debt Balance and Mortgage Debt Balance in Trillions of Dollars, Over Time, 2004-2020

With a total of $1.55 trillion by the third quarter of 2020, student loan debt is the second largest form of consumer debt behind mortgages. It surpassed both auto and credit card debt in 2010 and has continued to rise. In fact, since 2004 student loan debt has increased by more than $1.2 trillion. Credit card debt took a downturn in the first three quarters of 2020 as the COVID-19 pandemic shrank consumer spending.

U.S. Consumer Debt Balances in Trillions of Dollars (Non-Mortgage), Over Time, 2004-2020*

U.S. Consumer Debt Balances in Trillions of Dollars (Non-Mortgage), Over Time, 2004-2020

*All data are as of the fourth quarter of each year except 2020, where the most current data is as of the third quarter.
Sources: Federal Reserve Bank of New York, The Center for Microeconomic Data, Data & Reports, 2020 Q3 (https://www.newyorkfed.org/microeconomics/data.html).

Unlike the Nation, Texas Student Debt per Capita has not Surpassed Auto Debt

Mortgage debt is still the largest form consumer debt in the nation at $35,830 per capita by the third quarter of 2020. However, amongst the other forms of consumer debt, student loan debt became the second largest in 2010 – overtaking auto and credit card debt – and has continued to rise, although at a slower rate recently. Credit card debt has declined during the first three quarters of 2020, as the COVID-19 pandemic discouraged consumer spending.

U.S. Non-Mortgage Consumer Debt per Capita, 2004-2020*

U.S. Non-Mortgage Consumer Debt per Capita, 2004-2020

In Texas, mortgage debt is also the largest form of consumer debt, at $29,030 per capita by the third quarter of 2020. Amongst the other forms of consumer debt, student loans surpassed credit card debt in 2010, but has not surpassed auto debt. As seen nationally, credit card debt has declined during the first three quarters of 2020 while student loan debt has continued to rise.

Texas Non-Mortgage Consumer Debt per Capita, 2004-2020*

Texas Non-Mortgage Consumer Debt per Capita, 2004-2020

*All data are as of the fourth quarter of each year except 2020, where the most current data is as of the third quarter.
Sources: Federal Reserve Bank of New York, The Center for Microeconomic Data, Data & Reports, 2020 Q3 (https://www.newyorkfed.org/microeconomics/data.html).

Texas Student Loan Balance Per Capita Lower Than National Average

In the third quarter of 2020, Texans had a per capita student loan debt balance of about $5,300, lower than the national balance of $5,620. Texas has the third lowest student loan debt balance among the six largest states. Student loans in this analysis include loans to finance educational expenses provided by banks, credit unions and other financial institutions as well as federal and state governments.

Student Loan Debt Balance per Capita by State, 2020 Q3

Student Loan Debt Balance per Capita by State 2020 Q3

With a per capita average of $46,550 in debt, Texans have the second lowest debt balance among the six largest states and the national average. This debt profile includes mortgage accounts, home equity revolving accounts, auto loans, bankcard or credit card accounts, student loans, and other loans (such as consumer finance and retail loans).

Total Debt Balance per Capita by State, 2020 Q3

Total Debt Balance per Capita by State 2020 Q3

Sources: Federal Reserve Bank of New York, The Center for Microeconomic Data, Data & Reports, 2020 Q3 (https://www.newyorkfed.org/microeconomics/data.html).

The Nation Sees Decreases in Severely Delinquent Balances as the CARES Act Offers Some Relief During Pandemic

Nationally and in all of the six largest states, the percentage of balances that were at least 90 days delinquent dropped in the third quarter of 2020 compared to the third quarter of 2019. This is due to the CARES Act, passed on March 26, 2020, that offered relief on a variety of fronts, including automatically suspending payments on most types of federal student loans.

Delinquency Status of Debt per Capita by State, 2020 Q3

Delinquency Status of Debt per Capita by State 2020 Q3

Percentage of Balance 90+ Days Late by State, 2019 and 2020

Percentage of Balance 90+ Days Late by State 2019 and 2020

Note: The Derogatory delinquency status includes a person with any level of delinquency combined with repossession, charge off to bad debt, or foreclosure.
Sources: Federal Reserve Bank of New York, The Center for Microeconomic Data, Data & Reports, 2020 Q3 (https://www.newyorkfed.org/microeconomics/data.html).

Severe Delinquency for Student Loan Borrowers Surpassed Credit Cards in 2012 in Texas and the Nation

The percentage of debt that is severely delinquent – 90 or more days late – has shifted by debt type over time. Nationally, severe student loan debt delinquency (including federal, state, and private student loans) overtook credit card delinquency in 2012 to have the highest percentage of severely delinquent borrowers. Most student loans are made by the federal government as entitlements and have no credit rating requirement for borrowers. While severe mortgage debt delinquencies grew during the Great Recession, it fell below auto debt in 2014 and now has the lowest percentage of severely delinquent borrowers, at 0.7 percent in the third quarter of 2020. Student loan delinquency fell dramatically in the first three quarters of 2020, as the COVID-19 pandemic spread across the nation and student loan relief was enacted through the CARES Act.

Percent of U.S. Consumer Debt Balance 90+ Days Delinquent, Over Time, 2004-2020*

Percent of U.S. Consumer Debt Balance 90+ Days Delinquent, Over Time, 2004-2020

In Texas, severe student loan debt delinquency surpassed credit cards in 2012. In 2019, 11.9 percent of student loan borrowers and 9.2 percent of credit card borrowers were 90 or more days delinquent. Unlike the nation, the percentage of severely delinquent mortgage borrowers never surpassed auto debt, even during the Great Recession. 2020 data for Texas are not available yet.

Percent of Texas Consumer Debt Balance 90+ Days Delinquent, Over Time, 2003-2019

Percent of Texas Consumer Debt Balance 90+ Days Delinquent, Over Time, 2003-2019

* All data are as of the fourth quarter of each year except 2020, where the most current data is as of the third quarter.
Sources: Federal Reserve Bank of New York, The Center for Microeconomic Data, Data & Reports, 2020 Q3 (https://www.newyorkfed.org/microeconomics/data.html).

Delinquent Balances for Student Loan Debt Decreases Dramatically in 2020 Due to COVID-19 Pandemic Relief Measures

The percentage of credit card balances and auto loan balances that were severely delinquent increased during the 2008 economic recession, then decreased and have remained at relatively lower levels since. Student loan delinquency has decreased dramatically during the first three quarters of 2020 as a result of relief measures included in the Coronavirus Aid, Relief, and Economic Security (CARES) Act, passed on March 26, 2020.

New 90+ Days Delinquent Loan Balances in Billions of Dollars (Non-Mortgage), Over Time, 2003-2020*

Percent of Texas Consumer Debt Balance 90+ Days Delinquent, Over Time, 2003-2019

* All data are as of the fourth quarter of each year except 2020, where the most current data is as of the third quarter.
Sources: Federal Reserve Bank of New York, The Center for Microeconomic Data, Data & Reports, 2020 Q3 (https://www.newyorkfed.org/microeconomics/data.html).

Majority of States Saw Increases in Student Lending Activity From 2017 to 2018

Between July 2017 and July 2018, almost two-thirds of U.S. states saw increases in the total volume of student loans. This ranged from nearly flat levels in Texas to an almost 200 percent increase in Alaska. The remaining states saw decreases ranging from a reduction of one percent in Maryland to a 78 percent lower volume in South Dakota.

One Year Change in Student Loan Volume, by State, (July 2017 to July 2018)

One Year Change in Student Loan Volume, by State (July 2017 to July 2018)

Sources: Consumer Financial Protection Bureau (CFPB), Consumer Credit Trends, Student Loans Origination Activity, Geographic Changes, 2018 (https://www.consumerfinance.gov/data-research/consumer-credit-trends/student-loans/origination-activity/).

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