Student loan developments continuously include?
1. increasing total education loan debt, and,
2. more delinquencies.
No different this occassion.
Student-loan debt–the fastest-growing category–rose $31 billion to $1.2 trillion.
That covers #1, for #2:
Last quarter, the share of auto-loan debt 90 and up days overdue jumped to 3.5%, from 3.1%. A similar rate for education loans rose to 11.3% from 11.1%. Other measures that track how rapidly Americans are falling into delinquency on these plans are worsening, the New York Fed said.
I wrote about car loan package issues on my bankruptcy site today.
The cause is similar, lending to the people who cannot afford to repay.
Colleges push figuratively speaking, because they get the $, and risk nothing if your schooling they provide does not bring about income sufficient to repay the student loans.
The sub-prime car loan folks are just creating securities to package and then sell before they leave town.
More through the Neil Shah story on Morningstar:
Meanwhile, student-loan debt balances rose $77 billion just in 2009.
“The increasing trend in student-loan balances and delinquencies is concerning,” said Donghoon Lee, a brand new York Fed researcher.
Unlike other sorts of consumer debt, education loans are hard to discharge in bankruptcy–making them even more of a potential drag on a borrower’s future consumer behavior.
“Student-loan delinquencies and repayment problems seem reducing borrowers’ ability to form their particular households,” Mr. Lee said.
Yes, We have blogged here before on discharging education loan debt in bankruptcy; difficult, and not impossible.
Gillian B. White continues the student loan default theme in the Atlantic:
Along with the growing worth of tuition is a growing selection of former students who have difficulty making their debts on time, or at all. Based on the study, for people under the age of 30, the proportion who were late on their payments climbed to 35 % in 2012, up from 20 percent in 2004.
She goes on to cite a work calling for “more nuanced” payment plans; having private lenders use income based repayment plans, similar to the government student loan programs.
But which is throwing thimblefuls of water on the barn fire.
Student loan debt should really be like any other debt in bankruptcy.