Student Loan Debt Sets New Record High
Dec 20th, 2018 @ 10:44 PM by Amber Nelson
U.S. student loan debt has reached a new all-time high and shows no sign of backing down, according to data from Bloomberg.
Total outstanding student loans grew to $1.465 trillion in November, the highest level on record and more than twice the amount of student loan debt that existed in June 2009 at the official end of the recession.
With more than 90% of the loans being federal student loans – those guaranteed by the U.S. Department of Education – that amount of student loan debt poses a significant risk to the government if another recession arises and borrowers en masse are not able to pay off their debts.
Certain groups face even more risk due to the size of their student debt burdens. More than 2.7 million borrowers have debts of $100,000 or more and of those 700,000 owe $200,000 or more in student loans.
The Bloomberg data also found that many seniors are taking student loan debt into retirement with them. There are 1.8 million borrowers age 62 or older who owe a collective total of $62.5 billion in federal student loans.
The age group of borrowers that owes the most debt are those between the ages of 35 and 49. All together their total is $530 billion in student loan debt.
Interestingly, there is one cohort of borrowers that is faring worse than the rest right now. Those that received student loans in 2012 have defaulted at a faster rate than any other borrowers by year since 2007.
One reason this group of borrowers may be having a harder time paying off their debts is that they started their careers during the worst of the labor market days. The unemployment rate was double what it is today and job searches lasted three times as long then, according to the Bureau of Labor Statistics. Those from the 2012 cohort probably struggled to find work right away and have been unable to make their student loan payments on time.
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to Loan.com and Mortgage101.com.