According to data from the Federal Reserve Bank of New York, 11.2% of student loans were more than 90 days past due and the rate was steadily rising. Only credit cards had a higher rate of delinquency at 12.2%. Younger workers have continued to face the most difficult conditions in the labor market. Workers between 20 and 24 years old have a 14.6% unemployment rate, compared to the national average of 9.1% recorded in July.
Student loan debt outpaced credit card debt for the first time last year and is likely to top a trillion dollars this year as more students go to college and a growing number borrow money to do so. According to reports, two-thirds of bachelor’s degree recipients graduated with debt in 2008, compared with less than half in 1993.
Education policy experts expect that the mounting debt may have extensive implications for the current student borrower. Individuals finishing or leaving school with a lot of debt, may find their choices to be different than the generation before them. Things like buying a home, starting a family, a business, and saving for their own children’s college education may have to be put on hold for those with insurmountable student loan debt.
Students who borrow to attend for-profit colleges are especially likely to default. They make up about 12% of those enrolled in higher education, but almost half of those defaulting on student loans. According to the Department of Education, about a quarter of students at for-profit institutions defaulted on their student loans within three years of starting to repay them.
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