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Student Loan Delinquencies Soar on Unemployment

Posted by Joseph Trevisani on May 23, 2013 12:30:00 PM

The number of overdue student loans climbed to a record in the third quarter of last year, according to a report from the U.S. Department of Education, as young people suffer some of the highest rates of unemployment in the country.

Eleven percent of all student loans were delinquent, defined as at least 90 days past due.  The percentage has risen substantially since the beginning of last year when it was about 8.5%.

One possible explanation is that students who decided to stay in school or return to college in the wake of the financial crash and recession have now graduated and are unable to find work.  Almost one third of 20-24 years olds are neither employed or in school according to the study.

The trillion dollar student loan business has become an issue for the Federal debt as the entire loan industry was absorbed by the Washington in 2010 and is now the second largest category of consumer debt after mortgages.

Figures from the Federal Reserve show similar results. Student loan delinquencies rose from 6.23% at the end of 2003 to 11.73% in the fourth quarter of last year then ebbed slightly to 11.19% in the first three months of 2013.

 

Joseph Trevisani

Chief Market Strategist

WorldWideMarkets

 Chart: Bloomberg

ScreenHunter 1201 May. 23 12.54

 

 

 

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