Smart Borrower Blog

Student Loan Debt Reaches Record Levels


Oct 19th, 2011 @ 6:56 PM by Amber Nelson


Total student loan debt in the U.S. has surpassed national credit card debt, according to new figures from the Federal Reserve Bank of New York.

New student loan funds borrowed last year grew to $100 billion dollars, a record high, and now total outstanding student loan debt has reached $1 trillion for the first time in history.

Full-time undergraduate students borrowed an average of $4,983 last year, according to the College Board. That figure is more than double the average from 10 years ago, after adjusting for inflation.

In the wake of the current economy, default rates on student loans are increasing as well. As of 2009, the default rate on student loans was up to 8.8 percent from 6.7 percent in 2007. Such debts don’t just go away either. Even bankruptcy won’t dissolve federal student loans.

This huge amount of student debt is causing many graduates to hold off on their other goals, said economist, Chris Christopher, in a Fox Business article .

“It is delaying them from buying a car, getting married, having children—it’s a vicious cycle,” he says. “The volume of student loans is increasing, and the first reaction is to pay food and rent and to delay [paying] other things, like loans.”

Not only is that cycle unfortunate for the individuals, but it also promises to limit that segment of society’s contribution to the economy. With fewer new graduates consumers spending money on weddings, children and big ticket items like mortgages and cars, economic recovery may be further delayed.

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

One Response to “Student Loan Debt Reaches Record Levels”

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