Submitted by Mark Hanna
Courtesy of MarketMontage. View original post here.
Long time readers know my long history with the “coming” student loan bubble – well it’s no longer coming, it’s here and little different than the mortgage disaster, we’re seeing the same pattern. But this time the government has gotten ahead of the curve – taking over the entire market now rather than after the bubble burst as in housing. Meanwhile colleges are taking the ball and running with all the “free money” being thrown at them and tuition inflation continues to outpace wages by 2:1 or 3:1 ratios annually. Won’t rehash it all – some of the latest data via a WSJ story. Keep in mind all this default data DOES NOT INCLUDE those currently in school or just out as they are in deferment. So it’s only going to get worse.
- The number of young borrowers who have fallen behind on their student loan payments has soared over the past four years, the Federal Reserve Bank of New York said in a report released Thursday. According to the report, 35% of people under 30 who have student loans were at least 90 days late on their payments at the end of last year, up from 26% in 2008 and 21% at the end of 2004.
- Amplifying the burden: a growing number of young adults have become student borrowers. All told, 43% of 25-year-olds had student debt in the fourth quarter of 2012, up from about 33% in the fourth quarter of 2008.
- The amount of U.S. student-loan debt increased 11% last year to $966 billion and is up 51% since 2008, according to the report.
- While 40% of student-loan borrowers owe less than $10,000, a growing number have higher loan balances. Nearly 47% of borrowers owe between $10,000 and $50,000, up from 38% in the fourth quarter of 2005. The share of borrowers with balances of $100,000 or more has also jumped, to 3.7% from 1.7% during this period.
- The New York Fed’s numbers exclude the roughly 44% of borrowers who don’t have to make loan payments, typically because they are still in school or have been granted a loan deferral or forbearance. .
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