ECREDIT DAILY: Student Loan Delinquencies Worse Than Previously Known; One-Third Late on Payments
Career College Central Summary:
Under heavy criticism for not fulling knowing or revealing the full extent of student debt, U.S. education officials have released new data that shows about one-third of borrowers with federal education loans are late on payments
The information put out by the Education Department on Thursday doesn’t tell the whole story, but it’s the most comprehensive data that reflects the delinquency epidemic among student-loan borrowers.
Based on the new figures, about 33 percent of borrowers were more than five days late on one of their federal student loans as of Dec. 31. Previous measures have put that delinquency rate at a much lower number, even though it is well known that student-loan debt has already surpassed all other forms of consumer credit balances, except mortgages.
About 41 million Americans hold more than $1.1 trillion in education loans, owned or guaranteed by the Education Department. The new data has to do with more than two-thirds of the $1.1 trillion total. The remainder is debt serviced by the private sector under a bank-based federal loan program that has since been discontinued.
The Education Department has been criticized by lawmakers and consumer advocates for not revealing enough details on its student loan portfolio and the true delinquency rates. ram.
Between 2004 and 2014, other data has shown that the average student loan balance increased by 74 percent. During that time period, the number of borrowers soared by 92 percent. The surging costs of college tuition — and the growth of for-profit colleges offering much-debated and criticized alternatives to traditional four-year universities — have been the biggest contributors to the student-loan debt crisis.
The Education Department’s main program had a 17 percent delinquency rate as of Dec. 31. In comparison, the Federal Reserve Bank of New York recently estimated that just 6 percent of all outstanding consumer debt was at least 30 days late by the end of last year.
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