Smart Borrower Blog

Student Loan Delinquencies Outpace All Others


Jun 21st, 2017 @ 9:30 PM by Amber Nelson


While auto loan and credit card delinquencies are on the rise, they are extremely low compared to the rapid increase of student loans falling into delinquency.

According to the Federal Reserve Bank of New York’s latest U.S. Economy in a Snapshot, “flows into serious delinquency for all loan types except student loans peaked during the Great Recession and are currently low or very low on a historical basis.”

The report stated that the transition rate into delinquency (the percentage of loan balances that have fallen behind in payments in the past 30 days) for student loans was about 10 percent during the first quarter of 2017, up slightly from the 2016 last quarter. As of the first quarter, 11 percent of all student debt was 90 days or more past due. Student loan debt delinquencies have risen consistently since 2004 while other debt rates appear to have peaked during the Great Recession and fallen back to much lower levels. Skyrocketing tuition, minimal job creation and job losses have contributed to the higher rates of student loan delinquencies over the past decade.

The student loan late payment rate is significantly higher than the transition rate for all other consumer debt, but there are some categories that are starting to see an increase as well. “This quarter saw a notable uptick in credit card debt transitioning into delinquencies, a continued upward trend of auto loans transitioning into serious delinquencies,” the Fed has said.

About 6 percent more of credit card loans were at least 30 days late during the latest quarter compared to the previous one. Total credit card delinquencies have risen to 7.5 percent in the first quarter of this year. Car loans have seen a 7.5 percent increase in the number of loans newly late in payments.

Aside from student loans, delinquencies in mortgages, auto loans, credit cards, and home equity loans are quite low, a sign of either an improving economy, better financial management or both.

About Amber Nelson
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to Loan.com and Mortgage101.com.

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