The Looming Crisis in Student Debt
Student loan debt has grown much faster than other types of debt. As the chart below shows, student loan debt has been exploding and now exceeds both credit card and auto loan debt in the country.
According to a recent study by Fair Issac Inc. (FICO), newer vintage loans have a much higher risk of default. Higher debt loads for graduates and non-graduates have combined with protracted weakness in the labor market (especially for recent graduates) to produce a dramatic increase in the volume of delinquent student loans. Although the volume of student loan debt has never been close to the volume of mortgage debt in this country (mortgage debt peaked at about $9.3 trillion in 2008 while student loan debt is just now reaching $1 trillion), there is still the potential for rising defaults to have significant impacts on many financial institutions, if not the system as a whole. The percentage of student loans that are seriously delinquent is currently twice as high as the percentage of mortgage loans that are seriously delinquent. Despite student loans being a much smaller overall volume of debt than mortgages, the dollar volume of seriously delinquent student debt is over $30 billion and climbing compared to $8o billion of seriously delinquent mortgage debt on an aggregate balance that is nine times the volume of student loan debt.college, Debt, Education, Financial comment below, or link to this permanent URL from your own site.