We are on the brink of a student loan rate increase – rates on new subsidized federal loans will double in July unless Congress takes steps quickly. Loan balances are up and delinquencies are up – and they’re up for everyone. We wrote yesterday that Gen Y is hardest hit by student loans, but there are still millions of student loan borrowers in other age brackets that are affected. Student loans are one of those rare issues that cuts across race, age and gender and affects far too many of us.
And student loans don’t just impact college graduates. Many who borrowed were unable to complete their education (for one reason or another) and these are among the hardest hit because they have the debt without any advantages accorded by a degree. Certainly there are many student loan debtors who are earning enough to pay their debts and still have a life, but for far too many, unfortunately the reality is much harsher.
More People Borrowing and Borrowing More
Since 2004 (see chart above), the number of student loan borrowers has nearly doubled and the individual debt per borrower has risen a staggering 166%. So are we just borrowing more? Yes, obviously, but why? Because colleges continue to raise tuition and we have no choice but to pay the increasing rates or else deny ourselves an education.
More Is Owed on Student Loans Than Any Other Type of Debt
As the chart above shows, since the economy hit hard times in 2008, all categories of household debt have decreased except for student loans. Home equity lines of credit, auto loans and credit card debts all peaked around 2008 and have been on the decline since. Student loan debt has proven to be tragically recession proof (at least for lenders) and has been on the rise every year.
Student Loans an Epidemic for All Ages
You can see by the graph above how broad the age range is that’s affected by student loan debt. It runs the gamut from under-30s up to seniors in their 60s. What is interesting is to crunch the percentages beyond what’s displayed and look at some trends. The percent of the total loan balance for under-30s is increasing as a share of total loan balances. This is a disturbing trend and means that loans are increasingly following us as we age rather than being extinguished within a few years of graduating.
Delinquencies on the Rise Across the Board
Here’s the thing about the charts above – the left chart shows an overall delinquency rate at about 17.5% but this data is misleading because it factors in loans that are not in repayment. What? All those loans that belong to people still in school or returned to school have a zero chance of being delinquent so they uplift the delinquency percentage. But the chart on the right takes those out of the calculation and this rate skyrockets to 31% delinquency. Pretty interesting data provided by the Fed, huh?
Mark Twain aptly said, “There are three kinds of lies: lies, damned lies and statistics.” Some articles and studies tell us that there is no real student loan crisis – that it’s manufactured drama and most students can afford to pay their loans. Still others say it’s a bubble about to burst. From a balanced perspective, it’s certainly a looming crisis with the potential to burst unless our lawmakers take some steps to make meaningful changes.
You should also be on the lookout for unsolicited offers for credit cards, financing and consolidation offers. Many private companies, including student debt lenders and consolidators do not always respect digital privacy of their customers and may sell your information to third parties. Be wary when you get unsolicited offers like these!
No matter your personal feelings on the matter, we at Tuition.io want to help you get your student debt under control. With that in mind, we invite you to download and use our free award-winning student loan management tool where you can view all of your debt – both public and private – in one easy to use interface. We also hope you’ll stay informed about pending legislation and other student loan news by checking out our blog. Here are some recent posts you may enjoy: