Student Debt, Delinquencies Skyrocket
The New York Fed released their household credit and debt reportyesterday, and they show increases in student loan debt relative to other forms (mortgage, credit card, auto loan and others). To keep this in perspective, mortgage debt represents 71% of all debt, and student debt represents about 8-9%. So there’s still a wide gulf here, and we shouldn’t jump to call this the “student loan bubble.” The scales of the markets are in no way similar.However, student loan debt is defaulting at higher and higher rates, and that should raise a lot of concern, since it has downstream effects for recent college graduates throughout the economy.
A recent New York Fed study found that 94% of recent graduates had borrowed to help pay for their education, and average debt levels among student borrowers is $23,000. Remember, that average includes seasoned borrowers, who presumably borrowed less and also in many cases reduced the principal amount of their loans, so the average amount borrowed by recent grads is