Pub. 5 2016 Issue 9

l e a d i n g a d v o c a t e f o r t h e b a n k i n g i n d u s t r y i n k a n s a s 26 HOW BANKS CAN TACKLE THE STUDENT DEBT CRISIS M ORE THAN ALMOST any other issue, student debt is driving whether and how your younger customers engage with your bank. With more than $1.26 trillion in outstanding student loans—nearly five times what it was in 2004—and 7 in 10 of new college graduates having some amount of student debt, a huge share of your customer base is financially strapped. The average recent college graduate spends nearly one-fifth of their salary on repaying debt, and most expect to have student loan debt well into their 40s. Sixty-three percent say their debt prevents them from buying a car or a similarly large purchase, and 75 percent say it hinders them from saving for and buying a home. High student debt levels also limit young people’s ability to take on debt to start and grow small businesses. And given the outsize role of small businesses in creating jobs, the student debt wave could be washing away future economic growth and opportunities. How will young Americans move into the financial products that are the bread and butter of relationship banking—home loans, HELOCs, small business loans, credit cards and car loans—if they are spending so much to repay their college or By Rob Nichols, President and CEOAmerican Bankers Association