Americans borrowing less, but investing more in personal intangibles?

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Americans are working their way out of debt. But they are continuing to invest in the personal intangible of education. According to a story in today's Washington Post, Climbing out of debt, Americans are saving more, "Compared with the summer of 2008, when consumer debt peaked, Americans now have 7 percent less mortgage debt, 12 percent less in auto loans and 15 percent less credit card debt, according to the Federal Reserve Bank of New York." Not mentioned in the story, however, but shown in the accompanying graphic is the data on student loans. Contrary to the overall trend of less borrowing, student loans are up 18%.

I can think of a number of reasons why student lending would go up. People tend to stay in or go back to school in a recession. And the cost of higher education keeps going up. But I would like to think that the data indicates an intuitive understanding of the important of intangibles assets that drive future growth. People understand that home mortgages and car loans are ways to pay for consumption over time. Borrowing money to go to school is seen as an investment in an intangible assets. And that is why I think student lending has risen while other forms of lending have declined.

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This page contains a single entry by Ken Jarboe published on February 16, 2011 8:45 AM.

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