Smart Borrower Blog

Student Loan Delinquencies Reach Dangerously High Levels

Aug 26th, 2015 @ 6:46 PM by Amber Nelson

Many Americans with student loans are struggling to keep up with their payments, according to data from the Federal Reserve Bank of New York, with delinquency rates at a startling level and the trend could continue in coming months.

In its  Report on Household Debt and Credit Developments, the New York Fed reported that during the second quarter of this year, the percentage of student loans that were delinquent by more than 90 days had increased to 11.5 percent, up from 11.1 percent in the first quarter.

While that increase may seem insignificant, it is important to realize that of the $1.19 trillion in student loans – a figure which has tripled in the past decade – roughly half of that amount is not yet in repayment as it is being deferred for those still currently in college. That means that the delinquency rate is closer to 23 percent for all active student loans, a dangerously high percentage for any loan category. (By comparison, only 2.5 percent of mortgage debt was delinquent by 90 days or more in the second quarter.)

The Education Department reported similar numbers last week, showing that 6.9 million borrowers had not made a single payment in the past year on their student loans. That was a 6 percent increase from the 2014 second quarter. Of course many of those loans are being deferred, but even taking those into account, the severely delinquent rate according to the Education Department is roughly 17 percent of all student loans.

Another worrisome aspect of the situation is that there are plenty more borrowers who have not yet qualified as “seriously delinquent” with payments more than 90 days late. There are millions of Americans who are late by one to two payments that may soon hit the three-month mark. That means the delinquency rate could continue to soar over the next year.

Interestingly, borrowers who attended for-profit schools  – and who receive mostly private student loans made up a disproportionate share of serious delinquencies.

About Amber Nelson
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to and

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