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New York Fed warns of troubling consequence of rising student loan debt

Student debt may be contributing to wealth inequality.

The increase in borrowing to pay for school combined with slow repayment rates could be widening the gap between the haves and the have-nots, researchers at the Federal Reserve Bank of New York wrote in a blog post Monday. The warning is based on a new analysis from the New York Fed, also published in the blog post, which finds that student debt is a major factor among U.S. households with negative wealth — or more debt than assets.

Student loans constitute 40% of the total debt of households with a net worth of between negative $12,600 and negative $46,300.

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