Student loan debt


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Student Loan Debt is rising...

And so are the default rates.

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Student loan debt

  1. 1. Student Loan DebtIt’s Getting Ugly!
  2. 2. • From the second to the third quarter of 2011, the total outstanding student loan balance grew 2.1 percent, from $852 billion to $870 billion.• Of the 241 million people in the United States who have a credit report with Equifax, our data provider, about 15.4 percent—or 37 million—hold outstanding student loan debt.• Among people under thirty years old, 40.1 percent have outstanding student loan debt.• Among people between the ages of thirty and thirty-nine, 25.1 percent have outstanding student loan debt.• As a result, $580 billion of the total $870 billion in student loan debt is owed by people younger than forty (see charts below). People under 40 make up 66.6% of total student loan debt
  3. 3. • The average outstanding student loan balance per borrower is $23,300.• About one-quarter of borrowers owe more than $28,000; about 10 percent of borrowers owe more than $54,000.• Borrowers between the ages of thirty and thirty-nine have the highest average outstanding student loan balance, at $28,500,Average outstanding loandebt per student is $23,300
  4. 4. • How much difficulty are borrowers having paying back their debts?• Of the 37 million borrowers who have outstanding student loan balances as of third-quarter 2011, 14.4 percent, or about 5.4 million borrowers, have at least one past due student loan account.• Together, these past due balances sum to $85 billion, or roughly 10 percent of the total outstanding student loan balance.• To put this in perspective, the same 10 percent rate applies on average to other types of household delinquent debt, including mortgages, credit cards, and auto loans.5.4 Million or 25% of borrowers arepast due (excludes deferments)
  5. 5. • some special accounting used for student loans, not applicable to other types of consumer debt, makes it likely that the delinquency rates for student loans are understated.• In the case of federally backed loans, which represent a majority of total lending, repayment is deferred until the student graduates from school and can then be pushed back by another six-month grace period.• How do these student loans in deferment or grace periods show up on credit reports and contribute to the delinquency statistics?• Given that no payment is necessary until graduation, these deferred student loans are not included in the past due balance but they are included in the total balance from which the delinquency rate is derived.Delinquency rates areunderstated
  6. 6. • In sum, student loan debt is not just a concern for the young.• Parents and the federal government shoulder a substantial part of the postsecondary education bill.• Moreover, the student loan delinquency picture is not fully captured in the broad statistics since a significant proportion of borrowers and balances are not yet in the repayment cycle.• The implications of this last fact for future changes in the student loan delinquency rate are a very important area of research.The burden is broadlyspread…we all bear a costdirectly, or indirectly.
  7. 7. • Student loan debt is the only form of consumer debt that has grown since the peak of consumer debt in 2008.• Balances of student loans have eclipsed both auto loans and credit cards, making student loan debt the largest form of consumer debt outside of mortgages.Student Loan Debt History