1 in 3 Late in Paying Student Debt

Mobile Share Email Facebook Twitter LinkedIn

About one in three Americans trying to pay down their student loans is 90 days or more late on their payments, according to a new report by the Federal Reserve Bank of New York.

This is up sharply from a decade ago, when one in five people in repayment was that far behind.

The Federal Reserve estimates that 31% was the “effective” delinquency rate in 2012; it applies only to people who have actively been in repayment. The bank said this rate is a more accurate measure of the problem than the widely reported rate for 90-day delinquencies – 17 percent – which includes all borrowers, including current students and those who’ve been granted some type of loan payment deferral.

The report, “Measuring Student Debt and Its Performance,” provides more evidence that college debt is a major financial burden for a growing numbers of Americans. Between 2004 and 2012, the number of people borrowing for college has nearly doubled to about 39 million, and the total debt outstanding has nearly tripled to $1 trillion and now exceeds the nation’s credit card debt.

Delinquencies, by any measure, are higher for student debt than for any other type of U.S. consumer debt, including credit cards. The pace of delinquencies is also accelerating, according to the Federal Reserve.

Other trends highlighted in its report include:

  • The sharp rise in student debt contrasts with all other forms of household debt, which declined in the wake of the Great Recession as households tightened their belts.
  • The average college debt level for each borrower was $25,000 in 2012 – up from $15,000 in 2004 – and is being fueled partly by rising tuitions.
  • High debt burdens and rising delinquencies “negatively affect borrowers’ home purchases, other debt payments and access to credit,” the Federal Reserve’s report concluded.
Allesandra Lanza

Great post, as always! Don’t overlook those borrowers “who’ve been granted some type of loan payment deferral,” though. They’re often struggling just as much as the borrowers who are delinquent, postponing payment because of unemployment or financial hardship and all the while digging themselves further into debt if the interest accrues. My organization recently published a white paper that showed the majority of all student loan borrowers in repayment (when you add up everyone who’s delinquent or defaulted, plus those who are deferring) have experienced problems repaying the debt: http://www.asa.org/pdfs/corporate/missing-data.pdf.

Kim Blanton

Unfortunately Allessandra, you raise a good point. Too many young adults out there are struggling.

Maureen Coffey

“…up sharply from a decade ago” – that’s no wonder, just hop over to “FRED” the online real-time monetary reporting tools at the Federal Reserve to see that student debt “as we know it today” was practically non-existent before 2008 (when the financial meltdown began). Not only have students’ and their families’ financial situation deteriorated drastically, but tuition fees have climbed much faster than general price inflation (and certainly faster than incomes rose), PLUS student jobs are equally harder to come by or worse paid than before. The situation can only get worse from here since before (the parents’ generation could), on average, expect to have a fully paid house at retirement. The new generation will by then just have managed to get out of student loan debt – then it’s likely by that time tuition fees have risen once again, but households cannot support the next generation of students as their parents could.


“Yikes!” is right. That’s a tough article. However, at some point, individuals need to find solutions for themselves:
– Students (and their parents) should see the wisdom of taking the 1st 2 college years at the local community college.
– Students (and their parents) should see the wisdom of choosing a less-expensive university.
– Students (and their parents) should see the wisdom of choosing a career field that pays well enough to pay back student debt.

The solution is right in front of us — and as usual, it amounts to personal choice and prioritizing needs vs wants, otherwise these debt problems will only continue to grow.

(A side comment — a great number of the students I see graduating from our local high school are going to college with STEM degrees in engineering. They’ll have no problem at all finding a good paying job.)


“The solution is right in front of us — and as usual, it amounts to personal choice and prioritizing needs vs wants, otherwise these debt problems will only continue to grow.”

Agree with Bryan, amounts to personal choice and prioritizing needs vs wants is the bottom line to solve this continue problem.

Anne Hays Egan (@AnneHaysNM)

This represents a very large percentage of people running late on student loan payments, which may reflect both the challenges new graduates have in locating employment, as well as the difficulty in managing a large debt load.

Comments are closed.