By Maxwell Newman From Newsmax

The COVID-19 pandemic, inflation, and the uneven economic recovery have resulted in new reports that Americans are struggling with record amounts of debt, an eye-popping $15 trillion worth, to be exact.

Student loan debt, auto debt and medical debt are all reaching record levels among Americans, tracking with a broader trend of Americans feeling pain in their pocketbooks. While there is some positive news in Americans paying off a record $83 billion of credit card debt in 2020, the debt crisis continues to affect consumers at record levels. 

Bad news screams from two recent headlines; CNN’s “Americans Have Never Been in so Much Debt,” and the New York Post’s “Americans Hit a Record-Breaking Amount of Debt”. The headlines don’t fully put into perspective the massive problem, but delving deeper, the problem is worse than realized.

The Federal Reserve of New York has just reported that “between July and September, U.S. household debt reached a new record of $15.24 trillion”, representing an increase of 1.9% compared to the previous quarter.

In a statement provided to CNN, Donghoon Lee, a researcher at the Federal Reserve of New York, said, “As pandemic relief efforts wind down, we are beginning to see the reversal of some of the credit card balance trends seen during the pandemic.” While a reversion to pre-pandemic spending and debt trends was always to be expected, the New York Fed’s report puts into perspective how indebted Americans truly are. Mortgages hit $10.67 trillion, followed by auto and student loans “rising by $28 billion and $14 billion, respectively.”

The rising debt is a sign that Americans, many of whom are now vaccinated and ready to spend for the holidays, are returning to their pre-pandemic spending habits. 

Financial Responsibility Is Key

The total number of debt, $15.24 trillion, is one that troubles Ellen Lander, founder of Renaissance Benefit Advisors Group. Lander says that the level of debt is “tragic” and that part of the reason it has risen so high is because of the lack of financial literacy taught in schools.

“Why are we not teaching basic financial planning in elementary school? When I look at student debt, a lot of this has to do with a lack of financial literacy being taught,” the financial advisor comments. Lander goes on to say she is “a huge believer is behavioral finance. It is going to take a strategy and a plan to pay off debt. To pay off debt, it is important to remember: Financial responsibility is key.”

The recovery from COVID and inflation in today’s economy are likely key contributors to record levels of debt, as 2021 has been the year when medical debt, auto debt and student loan debt have all soared to new levels. It appears that people are returning to “normal” lives, meaning they are shopping, spending on personal items and scheduling check-ups and routine exams with their doctors.

According to Healthcare.com’s 2021 Medical Debt Survey, more than 30% of all Americans above age 18 are in medical debt, and among this number, an additional 30% say their deductible is too steep and that they cannot afford to pay it off.

In another study, published in the Journal of the American Medical Association, found that a lower number, 17.8% of Americans, “had medical debt collections as of June 2020”, and the South is even higher with 24% in medical debt “by far the highest of any region in the country”, author Marshall Terry states. With the holidays approaching, debt is a major concern for millions as well. According to a DebtHammer.org survey, 58% say they expect to take out a short term loan to pay for a holiday gift or celebration. Additionally, 85% of Americans state they “are making changes to their normal shopping routine.”

$1.37 Trillion in Auto Debt
 
It’s not just medical debt and loans for shopping. Americans have hit a record high of $1.37 trillion in outstanding auto debt in 2020, as of an April 2021 report. This is an astronomical increase from 10 years ago, when the overall auto loan debt was $677 billion. Like auto loan debt, student debt has also hit a record high, with 45 million borrowers who owe a record $1.7 trillion in student loans, according to Forbes.

All of the debt outstanding in America today is creating worries among consumers. In a sobering statistic, 46% of Americans expect to retire in debt.

While there is some positive news in Americans paying off credit card debt in 2020, medical debt, auto debt, and student debt have hit astronomical levels. In today’s uncertain economy, it remains to be seen whether outstanding debt will skyrocket further, or if a trend will begin to pay it off.

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