Student Loan Delinquency Rates Continue To Rise
According to new research from FICO Labs, the average student loan debt is up considerably over the past 7 years.
In addition, student loan delinquency rates are up considerably in the same time period.
According to FICO, the average US student loan debt in 2005 was $17,233.
By 2012, this number had jumped up to $27,253, an increase of 58%.
FICO points out that average credit card and car loan balanced owed by US consumers dropped over the same period of time.
Not surprisingly, student loan delinquencies also jumped considerably between 2005 and 2012.
The delinquency rate on student loans that originated between 2005-2007 was 12.4%, while the delinquency rate on student loans that originated between 2010-2012 was 15.1%.
One more somber note from the report - "in a related finding, FICO's quarterly survey of bank risk managers conducted in December 2012 found that nearly 60 percent of respondents expected delinquencies on student loans to increase over the next six months."
According to some estimates, outstanding student loan debt in the United States topped $1 trillion as early as last year.
Outstanding student loan debt (and delinquencies) has spiked since the start of the "Great Recession" in December of 2007 due to a number of different reasons, including:
1. Increasing tuition due to decreased state funding and other reasons
2. Less financial support for students from members of their immediate family
3. Less available part-time and summer jobs for students
There are other reasons why student loan debt has skyrocketed over the past 7 years or so, but these are likely the top three.
Many students have found that the "Bank of Mom and Dad" has closed due to the economic turmoil that has plagued the country over the past 6 years. Many American households simply can't afford to help their children out with their tuition and housing costs.
In addition, students who want to try and help defray their schooling costs have found it very difficult to find part-time work. After all, they are competing with millions of Americans who are out of work and are willing to work practically any job. Many college students are finding it very difficult, if not impossible, to find part-time or summer work.
Source: FICO - FICO Labs: U.S. Student Loan Delinquencies Climbing Fast, Showing No Signs of Slowing
Filed under: General Knowledge