consumer debt - The Aspen Institute

social norms regarding “good” and “bad” debt also influence decision making. Finally, cognitive biases, many of which are not fully understood, affect people's ...
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THE EPIC CONSUMER DEBT INITIATIVE The Aspen Institute’s Expanding Prosperity Impact Collaborative (EPIC) is a first-of-its-kind initiative in the field of consumer finance, designed to harness the knowledge of a wide cross-section of experts working in applied, academic, government, and industry settings toward the goal of illuminating and solving critical dimensions of household financial insecurity. As part of Aspen’s Financial Security Program (FSP), EPIC deeply explores one issue at a time, focusing on challenges that are critical to Americans’ financial security but under-recognized or poorly understood. EPIC uses an interdisciplinary approach designed to uncover new, unconventional ways of understanding the issue and build consensus among decisionmakers and influencers representing a wide variety of sectors and industries. The ultimate goal of EPIC is to generate deeply informed analyses and forecasts that help stakeholders (1) understand and prioritize critical financial security issues, and (2) forge consensus and broad support to implement solutions that can improve the financial lives of millions of people.



EPIC’s current issue is consumer debt, which includes unsecured debt, auto loans, student loans, and other forms of non-mortgage debt. The time is ripe for an in-depth examination of this issue because the U.S. has recently reached record high levels of outstanding credit card, auto loan, and student loan debt, while mortgage balances remain slightly below 2008 levels, raising critical questions about what this means for U.S. households’ financial security. Since consumer debt began to rebound from the Great Recession, aggregate balances have risen rapidly, with particularly large growth in education and auto loans. During this time, wages have grown more slowly. While delinquency rates for credit card and mortgage debt are below their historical averages, default is an increasingly serious problem in the student and auto loan markets. Additionally, debt in collections appears on one-third of all consumer credit reports. While many borrowers appear to be doing well, there are indications that consumer debt poses widespread challenges to financial security, especially for low- and moderate-income households and other financially vulnerable populations.

This is the right moment to better understand the changing dynamics of consumer debt, how households are managing the debt they are carrying, and the conditions under which it is a source of financial insecurity.

Accelerator: During the accelerator phase, EPIC will engage in activities to ensure awareness, leadership, and action-taking around consumer debt solutions. Over time, the accelerator functions will lead to long-term engagement of a diverse cross-sector group of strategic partners and adoption of EPIC solution ideas by decision-makers and influencers.

This report is a key first step in EPIC’s learning and discovery phase. In addition to conducting this research synthesis, we are surveying experts, convening leaders, and learning from consumers. This will help us better understand the specific aspects of debt that contribute most to financial insecurity, as well as identify ways to increase the priority of the issue among key stakeholders. This research primer sheds light on the meaning of current trends in consumer debt. It investigates the drivers, features, and consequences of consumer debt through a comprehensive review of the existing literature. The primer considers various frameworks for studying debt, drawing from the fields of economics, business, sociology, and consumer behavior. It analyzes historical patterns, contemporary drivers, and differences among demographic groups, as well as connections between specific types of debt and financial distress. Importantly, the primer also identifies critical gap