State of Student Aid in Texas – 2022

Section 11: Consumer Debt

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Total U.S. Consumer Debt Reaches $15.6 Trillion, Student Loan Debt $1.6 Trillion

Total U.S consumer debt – including mortgage, credit card, student loan, auto, and other debt – reached more than $15.6 trillion by the fourth quarter of 2021. This is an increase of about $5.6 trillion since 2005. Mortgage debt is the largest form of consumer debt, at nearly $11 trillion by the fourth quarter of 2021. Debt spiked leading up to and during the economic recession a decade ago, but total consumer debt reached even higher levels than that in 2021.

Total U.S. Consumer Debt Balance and Mortgage Debt Balance in Trillions of Dollars, Over Time, 2005-2021

Total U.S. Consumer Debt Balance and Mortgage Debt Balance in Trillions of Dollars, Over Time, 2005-2021

With a total of $1.58 trillion by the fourth quarter of 2021, 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 2005 student loan debt has increased by more than $1.1 trillion. Credit card debt took a downturn in the first three quarters of 2020 as the COVID-19 pandemic shrank consumer spending, but has been rising again since.

U.S. Consumer Debt Balances in Trillions of Dollars (Non-Mortgage), Over Time, 2005-2021

U.S. Consumer Debt Balances in Trillions of Dollars (Non-Mortgage), Over Time, 2005-2021

Sources: Federal Reserve Bank of New York, The Center for Microeconomic Data, Data & Reports, 2021 Q4 (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 $38,830 per capita by the fourth quarter of 2021. 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. Credit card debt declined during the first three quarters of 2020, as the COVID-19 pandemic discouraged consumer spending, but has been picking up again since then.

U.S. Non-Mortgage Consumer Debt per Capita, 2005-2021

U.S. Non-Mortgage Consumer Debt per Capita, 2005-2021

In Texas, mortgage debt is also the largest form of consumer debt, at $31,510 per capita by the fourth quarter of 2021. 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 declined during the first three quarters of 2020 but has been increasing again.

Texas Non-Mortgage Consumer Debt per Capita, 2005-2021

Texas Non-Mortgage Consumer Debt per Capita, 2005-2021

Sources: Federal Reserve Bank of New York, The Center for Microeconomic Data, Data & Reports, 2021 Q4 (https://www.newyorkfed.org/microeconomics/data.html).

Texas Student Loan Balance Per Capita Lower Than National Average

In the fourth quarter of 2021, Texans had a per capita student loan debt balance of about $5,330, lower than the national balance of $5,640. 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, 2021 Q4

Student Loan Debt Balance per Capita by State 2021 Q4

With a per capita average of $49,720 in debt, Texans have the third 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, 2021 Q4

Total Debt Balance per Capita by State 2021 Q4

Sources: Federal Reserve Bank of New York, The Center for Microeconomic Data, Data & Reports, 2021 Q4 (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 continues a trend that began after the first quarter of 2020 due to relief measures included in the CARES Act, passed on March 26, 2020.

Delinquency Status of Debt per Capita by State, 2022 Q1

Delinquency Status of Debt per Capita by State 2022 Q1

Percentage of Balance 90+ Days Late by State, 2021 and 2022

Percentage of Balance 90+ Days Late by State 2021 and 2022

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, 2022 Q1 (https://www.newyorkfed.org/microeconomics/data.html).

Severe Delinquency for Student Loan Borrowers Has Fallen Dramatically Since 2020

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 0.5 percent in the fourth quarter of 2021.

Student loan delinquency began to decrease starting in the first quarter of 2020 and has fallen dramatically through the fourth quarter of 2021 so that student loan debt delinquency is now lower than credit card delinquency. The student loan relief enacted through the CARES Act that was passed in March 2020 applied to nearly all student loan borrowers. The freeze on student loan repayment is currently set to expire on August 31, 2022.

Percent of U.S. Consumer Debt Balance That is 90+ Days Delinquent, Over Time, 2005-2021

Percent of U.S. Consumer Debt Balance That is 90+ Days Delinquent, Over Time, 2005-2021

Sources: Federal Reserve Bank of New York, The Center for Microeconomic Data, Data & Reports, 2021 Q4 (https://www.newyorkfed.org/microeconomics/data.html).

Delinquent Balances for Student Loan Debt Continue to Decrease 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. They decreased following the recession and were beginning to increase again prior to the start of the COVID-19 pandemic. Both credit card balances and auto loan balances have decreased since the first quarter of 2020.

Student loan delinquency has decreased dramatically since the start of the COVID-19 pandemic as a result of relief measures included in the Coronavirus Aid, Relief, and Economic Security (CARES) Act, passed on March 26, 2020. The freeze on student loan payments has made it impossible for the majority of student loan borrowers to become delinquent on their loan payments. New student loan delinquencies are now lower than both new credit card and new auto delinquencies.

New 90+ Days Delinquent Loan Balances in Billions of Dollars (Non-Mortgage), Over Time, 2005-2021

New 90+ Days Delinquent Loan Balances in Billions of Dollars (Non-Mortgage), Over Time, 2005-2021

Sources: Federal Reserve Bank of New York, The Center for Microeconomic Data, Data & Reports, 2021 Q4 (https://www.newyorkfed.org/microeconomics/data.html).

New Index Rates Universities Based on Economic Mobility of Students

The think tank Third Way has developed a new way of rating universities based on the economic mobility they provide their students. In particular, the rating is based on the proportion and performance of the low-income students at the institution.

Using the Economic Mobility Index, universities receive a rating and then can be placed into a tiered category based on their rating.

  • Tier 1: Universities that rate within the top 20 percent for economic mobility
  • Tier 2: Universities that rate between 20 percent and 40 percent for economic mobility
  • Tier 3: Universities that rate between 40 percent and 60 percent for economic mobility
  • Tier 4: Universities that rate between 60 percent and 80 percent for economic mobility
  • Tier 5: Universities that rate in the bottom 80 percent to 100 percent for economic mobility

Looking at average statistics by tiers demonstrates the differences between the universities that are providing a high level of economic mobility to their students compared to universities that are not. The top Texas universities, in the tier 1 category, have the lowest price-to-earnings premium, meaning that students see a faster return on their investment in their education compared to institutions in other tiers. The tier 1 institutions also have the lowest median net cost for a degree for low-income students. In Texas, federal student aid is disproportionately disbursed to the schools that demonstrate the highest economic mobility. Schools in the top two tiers, those providing the greatest economic mobility, have the largest average annual federal student aid.

Economic Mobility Index for Texas Universities

Tier 1
(30 schools)		 Tier 2
(12 schools)		 Tier 3
(7 schools)		 Tier 4
(11 schools)		 Tier 5
(5 schools)
Average Annual Federal Student Aid Received $105 million $83 million $24 million $54 million $17 million
Price-to-Earnings Premium 2.3 years 3.5 years 4.1 years 6.3 years 14.9 years
Median Net Cost to Earn Credential for Low-Income Students $39,917 $60,322 $64,879 $86,456 $80,314
Earnings Beyond High School Graduate for Low-Income Students $17,934 $21,424 $25,367 $18,424 $7,184

Sources: Third Way, A New Way of Rating Institutions of Higher Ed: Upgrading the Economic Mobility Index, July 21, 2022 (https://www.thirdway.org/blog/a-new-way-of-rating-institutions-of-higher-ed-upgrading-the-economic-mobility-index).

Texas Students Who Leave Without a Degree Have Lower Earnings Than Those Who Obtained a Degree

The Texas Higher Education Coordinating Board (THECB) tracks students for various outcomes, including degree completion and earnings from employment. Students who left school in the 2018-2019 school year without a degree or certificate had the lowest annual earnings compared to students who earned degrees or certificates at any level that year. The annual earnings differences between those without a degree and those with a degree are particularly large at the university level.

Median Annual Earnings* For Those Employed from the 2018-2019 Exit Cohort at Texas Community and Technical Colleges

Median Annual Earnings* For Those Employed from the 2018-2019 Exit Cohort at Texas Community and Technical Colleges

Median Annual Earnings* for Those Employed from the 2018-2019 Exit Cohort at Texas Universities

Median Annual Earnings* for Those Employed from the 2018-2019 Exit Cohort at Texas Universities

* Earnings data in the THECB Exit Cohort Reports is quarterly. The data are annualized for these charts by multiplying the quarterly data by four.
Sources: Texas Higher Education Coordinating Board, Exit Cohort Reports (http://www.txhighereddata.org/index.cfm?objectid=7F22CE00-E218-11E8-BB650050560100A9).

More than Three-quarters of Texas Higher Education Graduates Are Working or Enrolled Within One Year of Receiving Degree

The percentage of students that were either working or enrolled, or both, one year after receiving their degree or certificate has been relatively stable between 2013 and 2020. The percentage of students who were working only declined a few percentage points while the percentage of students who were enrolled only or enrolled and working increased a little.

This information is gathered as part of the marketable skills goal in 60x30TX, the statewide higher education plan for Texas. The goal is that 80 percent of students that obtain a higher education award from a public Texas institution will remain in Texas and be working or enrolled within one year of receiving the award. Institutions are being asked to create a process to identify marketable skills for each program they offer, in collaboration with workforce stakeholders. This identification of skills is intended to make it easier for students to articulate what they learned in their program, making them more marketable when looking for jobs.

Percentage of Students Working or Enrolled Within One Year After Award

Percentage of Students Working or Enrolled Within One Year After Award

Sources: Texas Higher Education Coordinating Board, Accountability System, Working or Enrolled Within One Year After Award (http://www.txhigheredaccountability.org/AcctPublic/InteractiveReport/ManageReports).

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