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The lack of reliable data on the $1.2 trillion student debt market may be hampering federal officials’ understanding of how student debt threatens economic growth, a top regulator said Monday.

 

Financial regulators, federal policymakers at the Treasury Department and Federal Reserve, and select bank chief executives who advise the Fed have been warning for several months that large unpaid student loan balances may jeopardize the economy in the coming years as bigger chunks of household paychecks go towards repaying college debt instead of buying new goods and services, investing in small businesses or saving for retirement.
But authorities lack a full understanding of how student debt affects financial decisions and how future problems in repaying student loans may impact other parts of the economy because the student loan market is  according to Rohit Chopra, Consumer Financial Protection Bureau assistant director and student loan ombudsman. Issues Chopra said "are not well understood" include why some borrowers repay loans faster, why they fall behind on their loans, and reasons for default.
“I am quite concerned that financial regulators and the public lack basic, fundamental data on student loan origination and performance,” Chopra said in a speech at the Federal Reserve Bank of St. Louis. The lack of good data is “adding further uncertainty about the potential spillovers into the rest of the economy,” he added.
Federal officials outside the Education Department, especially those at the Treasury Department, have long complained about the lack of reliable data on the federal government’s $1 trillion student loan portfolio. For example, officials are unable to determine the number of borrowers delinquent on their obligations, or the share of distressed borrowers in repayment plans that are based on their monthly incomes.
Chopra likened officials’ lack of understanding of the student debt market to financial regulators’ failure to fully understand the risks posed by souring home loans in the runup to the financial crisis. Janet Yellen, a senior Federal Reserve official who President Barack Obama has nominated to succeed Ben Bernanke as Fed chairman, acknowledged last week that regulators “missed some of the important linkages whereby problems in mortgages would rebound through the financial system.”