Consumer debt is ubiquitous. Although at any given time some Americans are debt-free, most of us carry debt some or even all of the time. We borrow for various reasons, and we are increasingly likely to incur debt also from non-loan sources (such as an out-of-pocket medical expense or being assessed a governmental fine or fee. Consumer debt is not inherently bad (taking on debt can often be a sound financial decision), but it is a concern today because it has reached record levels, and its effects reach deeply into financial security, physical and mental health, as well as the broader economy. Consumer debt is a systemic problem with significant consequences, but there are systemic solutions. With solutions ranging from product-level improvements to broader reforms, EPIC has identified options for stakeholders in every sector and for partnerships across sectors. Collectively, these solutions possess tremendous potential to address a critical dimension of household financial insecurity.
This inability to meet basic needs with income from labor, transfers, and other sources makes it difficult to maintain emergency savings and appears to push many households into debt. Moreover, these same households often rely on more expensive and higher-risk forms of debt, such as payday loans, subprime auto loans, and private student loans.
Our work on consumer debt includes a focus on the drivers, features, and consequences of household debt among these financially vulnerable households.
● Solutions Framework
EPIC is an initiative of the Aspen Institute's Financial Security Program.
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