May 10, 2022
Student Loans

QoD [UPDATED]: Excluding home loans, what are the three largest debts for American consumers?

Extra credit if you can rank them from highest to lowest

Answer: 

  1. Student loan 
  2. Auto loan
  3. Credit Card 

Questions:

  1. Which type of credit has grown the fastest from 2003-2021? Why do you think this is the case? 
  2. Using the chart, estimate the growth rate (in trillions of dollars) between 2003-21 for student loans, auto loans and credit cards. 
  3. What change do you see in credit card debt in early 2020 at the onset of the pandemic?
  4. Write a one sentence summary for this graph.

Here's the ready-to-go slides for this Question of the Day that you can use in your classroom.

Behind the numbers (Visual Capitalist): 

The key stories in non-housing consumer debt are student loans and auto loans. The former category of debt has grown substantially over the past two decades, with growth tapering off during the pandemic. This can be attributed to COVID relief measures which have temporarily lowered the interest rate on direct federal student loans to 0%...Auto loans, on the other hand, are following a similar trajectory as mortgages. Both new and used car prices have risen due to the global chip shortage, which is hampering production across the entire industry. To put this in numbers, the average price of a new car has climbed from $35,600 in 2019, to over $47,000 today. Over a similar timeframe, the average price of a used car has grown from $19,800, to over $28,000.

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Resources to supplement this question of the day include: 

  • Play Shady Sam in the NGPF Arcade to help your students learn the tricks of the loan trade 
  • This FinCap Friday, Move Over, Millennials, provides data on Gen Z's borrowing behaviors 

About the Author

Tim Ranzetta

Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.

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