526,222 views Aug 27, 2022 On August 24, President Biden announced the cancellation of $10,000 in federal student loan debt for most borrowers. But student loan accounts for less than 10% of household debt in America, which reached $16.15 trillion during the second quarter of 2022. And debt is likely to grow even further due to soaring inflation. 43% of Americans are expected to add even more debt within the next six months. So why are so many Americans in debt today and what impact does it have on the U.S. economy?
Policy plays a vital role in keeping household debt in check. Experts say outdated procedures such as wage garnishment, in which an individual's earnings are withheld for the payment of a debt, are in dire need of a policy update. A survey found that about 7% of workers in America had their wages garnished, according to the most recent study in 2016.
The government can also play a potential role in reducing certain kinds of borrowings, such as medical debt that is currently held by roughly 23 million Americans.
Watch the video to find out more about why household debt is rising in America.
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Why Americans Are Drowning In DebtShow less
Policy plays a vital role in keeping household debt in check. Experts say outdated procedures such as wage garnishment, in which an individual's earnings are withheld for the payment of a debt, are in dire need of a policy update. A survey found that about 7% of workers in America had their wages garnished, according to the most recent study in 2016.
The government can also play a potential role in reducing certain kinds of borrowings, such as medical debt that is currently held by roughly 23 million Americans.
Watch the video to find out more about why household debt is rising in America.
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» Subscribe to CNBC TV: https://cnb.cx/SubscribeCNBCtelevision
About CNBC: From 'Wall Street' to 'Main Street' to award winning original documentaries and Reality TV series, CNBC has you covered. Experience special sneak peeks of your favorite shows, exclusive video and more.
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Why Americans Are Drowning In DebtShow less
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Francisco Gimeno - BC Analyst Capitalism as has been understood since the end of WW2 allows people to get indebted with the security that most will be able to pay back and governments will protect anyway everyone. This was true for a long time, but now is not feasible anymore. People gets highly indebted as easy loan products or credit cards are available, savings are practically impossible when the real salary has objectively gone down in the last decade and paying back loans and credit cards, or even just a rent bill is not possible when almost everyone gets a poor or very poor credit score. Do we need a Sabbatical/Jubilee Year like the Jews in the Old Testament every 50 years? Debts were deleted and everything was reset to start afresh. We are afraid our complicated financial world would not dare to do this. Probably even it could not be done and maintain the social contract. But our world is changing and a new paradigm is coming. Let's hope for the best. Meanwhile, financial education is key.