a child ’ s chances of moving up in the income distribution relative to his or her parents — has remained stable over the past half century. 1 however, because of the increase in income inequality and stagnant or declining incomes for the least well - off, the consequences of being born to low - versus high - income 2 / 3 bis central bankers'speeches parents are greater today than in the past. these trends have contributed to a steady decline in “ absolute ” upward income mobility in the united states, as defined by the share of children who earn more in real terms than their parents. this fraction has fallen from 90 percent to 50 percent over the past half century. recent work by chetty and his co - authors has investigated the importance of higher education in achieving upward mobility. they find that many highly qualified lower - income students do not attend selective colleges, while those low - and middle - income students who do — despite facing greater challenges — fare almost as well as affluent students who attend the same colleges. their research also indicates that some colleges are better engines of upward income mobility than others, and that colleges that offered the largest number of low - income students pathways to upward mobility have become less accessible to them during the 2000s. as a result, highereducation ’ s contribution to increasing intergenerational mobility has diminished. it is unclear why access has fallen to colleges with relatively high mobility rates. one possibility is that recent budget cuts may have forced these colleges — which tend to be mid - tier public institutions — to raise tuition and change their admissions policies more than other institutions, such as less budget - constrained elite private institutions. empirical evidence points to a greater sensitivity to college costs in the higher education decisions of low - income populations. as a result, continued increases in college costs and debt burdens could inhibit higher education ’ s ability to serve as an important engine of upward income mobility. in my view, these developments are important and deserve increased attention. thank you for your kind attention. i will now turn it over to wilbert van der klaauw, who will give a brief overview of the current state of household debt. 1 see economic opportunity and income mobility, remarks at the association for neighborhood and housing development annual community development conference, april 11, 2016. 3 / 3 bis central bankers'speeches

the improvement in aggregate debt quality and performance conceals important underlying changes in debt holdings that could be consequential, with implications for the housing market and for consumer spending over the longer term. while older borrowers hold more debt of all types, there has been a significant shift among younger people toward student debt and away from mortgage and other debt. student debt has increased more than fivefold over the past 14 years, with more young adults taking out loans and borrowing larger average amounts. and, while debt delinquency rates overall have fallen, those for student debt have remained elevated. since 2012, the new york fed has devoted considerable attention to the rapid growth in student debt levels and delinquencies by publishing a number of reports. the findings in these reports were largely based on data from our consumer credit panel ( ccp ), a nationally representative dataset sourced from equifax credit reports. this unique dataset has enabled us to provide new insights into the overall state of the student loan market and into individual student loan borrowing and repayment behavior not available from other data sources. 1 / 3 bis central bankers'speeches today, we will first provide a brief overview of aggregate household debt and its borrowers, followed by a presentation based on new research on student debt, which focuses on delinquency and repayment rates. we find that recent cohorts of college students are defaulting at a lower rate than those who left higher education during the recession. but, at the same time, their repayment rates are also lower. despite an improving labor market, overall delinquency rates on student debt remain stubbornly high, and repayment progress has slowed further, likely reflecting the recent introduction of more accommodative payment plans. payment progress is particularly low for those with larger debts and for those from lower - income areas. much remains to be learned about the causes of the observed expansion of debt burdens and repayment problems among recent college graduates. over the past two decades, there has been a significant change in the financing of higher education — with state and local funding covering a smaller share, and students and their families bearing a greater proportion of rising college costs. while the federal student loan program has undoubtedly helped mitigate the impact of higher costs on college enrollment, more students now leave college with higher amounts of debt. at the same time, college dropout rates remain stubbornly high, and empirical evidence indicates that graduates from some colleges have had trouble finding