Student Loan Debt Continues Record High Climb
Feb 5th, 2020 @ 10:56 AM by Amber Nelson
Total U.S. student loan debt has reached a new high of $1.56 trillion this year, according to data from the U.S. Department of Education.
That debt load is spread out among 44.7 million borrowers, making for an average student loan debt of $32,731. College loan debt is now the second highest consumer debt category – mortgage debt is still number one – surpassing auto loans and credit card debt.
The average monthly student loan payment has risen to $393 and unfortunately the 90+ day delinquency rate as also increased to 10.8% of all borrowers. That’s worryingly high compared to a 1.3% delinquency rate among mortgage borrowers and a 1.47% rate among auto loan borrowers.
A separate report from Moody’s found that repayment of student loans has been slower than expected. Of those who were supposed to start repaying their loans between 2010 and 2012, only 51% have made any payments. Repayment has been particularly slow or non-existent among graduates of for-profit colleges.
And Moody’s reported that the annual net student loan repayment rate – the percentage of existing balances paid off in full each year – is just 3%.
The good news is that the college costs compared to average income seems to have stabilized. Coupled with the fact that fewer Americans are enrolling in higher education, student loan debt could start to level off, if not for the slow repayment rates.
The Education Department also released statistics on loan forgiveness programs. The Public Service Loan Forgiveness program received 136,473 applications in 2019 but only approved 1,561 – only roughly 1% – as half didn’t qualify and another quarter were missing information on their applications.
Large student loan debts are having an effect on the wider economy, as it can keep consumers from qualifying for mortgages or having enough savings to start small businesses.
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to Loan.com and Mortgage101.com.