More concerning news about student loan delinquency rates

[Exterous]

If you ask Sallie Mae what their 90+ day delinquency rate is they will tell you its only about 4.6%

However - I was unaware that this is including all issued student loans, including those that do not currently require re-payment, like those for people currently in school or who have a forbearance. Apparently this inclusion is about 44% of loans! (Seems a bit odd [shady?]to include a large number of people who do not need to make payments when calculating how many people are late making payments.)

The Federal Reserve notes that 31% of loans currently in re-payment are 90+ days delinquent. This is a 55% increase since 2004

(Page 13 and 15)
http://newyorkfed.org/newsevents/mediaadvisory/2013/Lee022813.pdf

Meanwhile the total student debt trippled in 8 years and the average individual student loan debt increased by over 70%

It seems a travesty that this is not making bigger news. We can barely mitigate the issues the government is talking about so it greatly concerns me that this doesn't seem to be one any policy maker's radar

 

[wirednuts]

we cant go after what we JUST got done screaming for- higher education. right now, colleges are where the money is at. degrees mean everything until you need a job. yes, you need your degree to GET the job, but it doesnt mean you will make enough money to live let alone repay your loans.

 

[Corporate Thug]

woah captain! she's about to burst!

 

[Screech]

Seems pretty obvious that everyone losing a job and trying to go into debt to get that college degree would bring us to the next great bubble (TM).

Also fitting:

http://www.quickmeme.com/meme/3srjl3/

 

[nextJin]

This is mainly because of online college and "diploma mills", you have single minority mothers of 4 working for low wages getting scammed into thinking a degree from some no name online college is worth the 27k in debt when they won't ever get a job in the field of female water acrobatics.

Extreme example but the obvious link between these numbers and the rise of online education is inarguable.

 

[rudder]

This is mainly because of online college and "diploma mills", you have single minority mothers of 4 working for low wages getting scammed into thinking a degree from some no name online college is worth the 27k in debt when they won't ever get a job in the field of female water acrobatics.

Extreme example but the obvious link between these numbers and the rise of online education is inarguable.

Extreme example but true. I have seen some colleges go from 10,000 students, to 15,000 to 20,000. Easy loan money and the promise of better paying jobs with that degree in hand have resulted in a college building boom.

 

[CptObvious]

This will be a slow bursting bubble due to the non-dischargeability of student loan debt. I suspect Sallie Mae and other lenders will keep kicking the can down the road for a couple more years, and then be crying for a bailout.

The real solution would be to implement educational reforms that steer students based on their abilities to college or vocational school at a younger age, like in Germany. Too bad there will never be the political will for that until the shit hits the fan.

 

[Exterous]

This will be a slow bursting bubble due to the non-dischargeability of student loan debt. I suspect Sallie Mae and other lenders will keep kicking the can down the road for a couple more years, and then be crying for a bailout.

I agree. With the inability of borrowers to discharge their loans this bubble will grow and last longer than if the market were forced to deal with the actual pressures of the lending environment. From what I can tell the mortgage rate peaked at around 10% during the housing bubble. Obviously not quite the same but with student debt approaching housing mortgage levels and no signs of slowing down a 3x larger delinquency rate is concerning.

Nothing on the TV news about this though. Nope - instead we days of coverage about the Florida sinkhole...

 

[highland145]

31% 90+?!?!?!? Even in my industry 30% total past due is the normal cap/goal.

We're hosed.

 

[Genx87]

Oh look govt manipulation of the market is working out so well again.

 

[unokitty]

we cant go after what we JUST got done screaming for- higher education. right now, colleges are where the money is at. degrees mean everything until you need a job. yes, you need your degree to GET the job, but it doesnt mean you will make enough money to live let alone repay your loans.

"A recent study by the Center for College Affordability and Productivity, a research-and-advocacy group, found that nearly half of all American college graduates in 2010 were underemployed, holding jobs that require less than a bachelor's degree."

From:
A College Degree Sorts Job Applicants, but Employers Wish It Meant More

 

[highland145]

The Federal Reserve notes that 31% of loans currently in re-payment are 90+ days delinquent.

Question. Since the loans never go away unless paid, does this # include every unpaid loan 90+ days? 10, 15, 20 year old loans?

I typically write off loans after 6 months of non-payment, ~10%/year. Been open 8 years so I would be at 70 to 80% 90+ days.

 

[Pray To Jesus]

Bubble gonna blow up soon.

 

[Exterous]

Question. Since the loans never go away unless paid, does this # include every unpaid loan 90+ days? 10, 15, 20 year old loans?

I typically write off loans after 6 months of non-payment, ~10%/year. Been open 8 years so I would be at 70 to 80% 90+ days.

I looked again at the data but cannot find information to answer your question. I would gather that it is every unpaid loan 90+ days. Interesting perspective.

The rates seem to be going up faster for those younger as well. Under 30 rose 66.7% to 35% compared to the 55% overall.

 

[Doppel]

This is great news.

The sooner this situation explodes the sooner we can stop sending kids to college and racking up 50k debts for music therapy degrees. We need this to come to a head as soon as possible.

 

[Gunslinger08]

I don't find the 55% increase in delinquencies or the 70% increase in average balance surprising.

The economy has been crap and 25 to 35 year olds are in the segment of people who were told they need to go to college for anything, even terribly stupid degrees that have no jobs other than very limited education opportunities. This means delinquencies are going to go up.

The 70% increase in average balance doesn't seem crazy to me. College, like just about everything, gets more expensive every year. If you just use a basic inflation calculator, prices have gone up about 22% in that time period. Increased demand, like any market based product/service, also increases prices. I can't find exact numbers for 2004 to 2013, but from 2000 to 2010, enrollment rose 37%.

What I do find crazy is that basically 1 in 5 loans was 90+ days past due in 2004. That was a relatively stable financial period (minus the .com bubble burst in 97-00).

 

[Attic]

Well at least rapid increasing cost of college isn't being fed by the folks taking out the easy and large loans who then can't repay them... I mean at least the system will correct itself and not get worse when all the loans are paid for by others when the government puts a gun to a certain segment of society and says "pay these loans for those people, or else"....

 

[Theb]

I want to position myself for the coming bailout, but my loan is relatively small and I always pay it on time :\
I've been paying my bills on time for so long it's like I don't know any other way.

31% 90+?!?!?!? Even in my industry 30% total past due is the normal cap/goal.

We're hosed.

Do any of your clients offer some sort of mentor program for those of us unable to not pay our bills?

 

[highland145]

I want to position myself for the coming bailout, but my loan is relatively small and I always pay it on time :\
I've been paying my bills on time for so long it's like I don't know any other way.



Do any of your clients offer some sort of mentor program for those of us unable to not pay our bills?

So you do pay your bills? Just stop doing it.

 

[Theb]

So you do pay your bills? Just stop doing it.

But they're bills... I have to pay them.

 

[highland145]

But they're bills... I have to pay them.

That's what I thought the 1st day I started in this industry.

 

[shortylickens]

we cant go after what we JUST got done screaming for- higher education. right now, colleges are where the money is at. degrees mean everything until you need a job. yes, you need your degree to GET the job, but it doesnt mean you will make enough money to live let alone repay your loans.

People arent GETTING more college, they're just paying more for it.
The massive influx of cash from loans just raised the cost, it did nothing to improve the quality or make more schools.

 

[Attic]

I know a guy who has 200k plus of debt, involved in a program to pay a minimum monthly (based on low % of his salarly). After 20 years all unpaid debt is forgiven (paid by someone else).

You would think that 200k of education would line you up to pay off all that debt even using low % salary contributions, but with job market in the tank I doubt it.

 

[Gunslinger08]

I know a guy who has 200k plus of debt, involved in a program to pay a minimum monthly (based on low % of his salarly). After 20 years all unpaid debt is forgiven (paid by someone else).

You would think that 200k of education would line you up to pay off all that debt even using low % salary contributions, but with job market in the tank I doubt it.

At 6%, $200k is $1432.86 a month for 20 years. That's more than the average mortgage in a lot of places. Lesson learned: Don't get expensive degrees unless you're going into a field that benefits from attending a specific university/program.

 

[Arglebargle]

It seems likely that when things are going poorly, your college loan payment is one of the first things to get the boot, as opposed to something like gas, food, rent.