By Allie Bidwell, Communications Staff
The amount of student loan debt reported by borrowers is significantly lower than the amount reported by lenders, according to a study from the Federal Reserve Bank of New York (FRBNY).
The study, “Do We Know What We Owe? Consumer Debt as Reported by Borrowers and Lenders,” compares data from two different sources: the Survey of Consumer Finances, which is published by the Board of Governors of the Federal Reserve System, and the FRBNY Consumer Credit Panel, which collects debt reported by lenders to Equifax. The study found that while most other types of debt levels – such as auto debt and home-secured debt – appeared similar between the two studies, credit card and student loan debt were significantly lower in the borrower-reported survey.
Credit card debt, for example, was found to be up to 40 percent lower in the borrower-reported survey than in the lender-reported survey. Student loan debt reported by borrowers was 25 percent lower than in the lender-reported survey. But a number of factors could have contributed to the disparity, according to the study.
First, the survey was conducted at a non-institutional, household-level, meaning borrowers who live away from home, but who hold student loan debt would not be counted. The survey’s method of surveying a single respondent for the household could also lead to undercounting of debt “held by grown children or other household members that are not fully known to the respondent,” the study said.
“And, of course, respondents may not be fully aware of their own current debt balances,” the study said. “A combination of the latter three factors could produce the type of balance gaps we observe [in the data].”
The study goes on to say that the inaccurate reporting could also be related to poor repayment outcomes.
“The poorer repayment rates we observe for uncollateralized debts may suggest an association between debt awareness and debt repayment quality,” the study said.
Publication Date: 8/27/2015
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