Friday, July 20, 2012

Student Loans - Crisis?



Here's the latest press release from the New York Federal Reserve:

NEW YORK – In its latest Quarterly Report on Household Debt and Credit, the Federal Reserve Bank of New York today announced that student loan debt reported on consumer credit reports reached $904 billion in the first quarter of 2012, a $30 billion increase from the previous quarter.  In addition, consumer deleveraging continued to advance as overall indebtedness declined to $11.44 trillion, about $100 billion (0.9 percent) less than in the fourth quarter of 2011.  Since the peak in household debt in the third quarter of 2008, student loan debt has increased by $293 billion, while other forms of debt fell a combined $1.53 trillion.

The New York Fed also released historical student loans figures, by quarter, dating back to the first quarter of 20031 as part of this quarter’s report.  These data show that student loan debt has substantially increased since 2003, growing $663 billion.  Outstanding student loan debt surpassed credit card debt as the second highest form of consumer debt in the second quarter of 2010.

“Student loan debt continues to grow even as consumers reduce mortgage debt and credit card balances,” said Donghoon Lee, senior economist at the New York Fed.  “It remains the only form of consumer debt to substantially increase since the peak of household debt in late 2008.”

Additionally, 90+ day delinquency rates for student loans steadily increased from 6.13 percent in the first quarter of 2003 to its current level of 8.69 percent.  They remain higher than that of mortgages, auto loans and home equity lines of credit (HELOC).2  90+ day student loan delinquencies were at their peak during the third quarter of 2010 at 9.17 percent and are the only form of those delinquencies to increase this quarter (by 0.24 percent).

Here's the latest about it from NYT