The People's Record

For the first time in the history of the United States, the delinquency rate on student loans is higher than the rate of all other consumer loans, including credit and car loans. According to the latest data from the New York Federal Reserve, total student loan debt stands at $956 billion.
January 21, 2013 

A new infographic from CollegeStats.org puts the U.S. student loan dilemma into perspective.

In November, the Fed’s Quarterly Report on Household Debt and Credit showed a “red flag” and that there was a growing problem because 11 percent of student loans were 90 days or more past due. The infographic showed that the delinquency rate rose by about five percent since 2005.

Most borrowers are under the age of 30, but for the past eight years, the number of Americans over the age of 30 attending school has been steadily rising (the research did not show the demographics of student loan debt or the default rate).

Since 2005, student loan debt has been exceeding credit card, auto loan and other consumer debt. The average student loan balance (2012) has surpassed the $20,000 mark, but with the delinquency rate rising there are ramifications for the borrowers: the federal government can garnish up to 15 percent of an individual’s income and Social Security disability and retirement income, collection charges of up to 20 percent can add an additional nine years to a 10-year loan and it will hurt the borrower’s credit score. 

A new survey by Financial Fit showed that 25 percent of parents say they have not factored college affordability into their search for getting their child into a college or university. The study also found that 46 percent are unsure how much debt their child is willing to take on and more than one-third are unsure how much debt they are willing to commit to.

An overwhelming majority of respondents said they would be willing to sell a car, get a second job or increase their debt so their child can attend a post-secondary institution, even though the enormous tuition rate is too expensive.

“Families are told ‘don’t look at the sticker price—it’s not real,’ and they believe it because it’s true,” said Frank Palmasani , a veteran guidance counselor and former college admissions director, creator of the Financial Fit™ program, in a press release.  “But that doesn’t necessarily mean that a school is going to be affordable. Under a blanket of false security, students spend junior and early senior year selecting colleges, testing, and applying, all the while falling more and more in love with their top pick, which may well be unaffordable.”

Early last year, Moody’s economist Cristian deRitis warned that student loan debt defaults could lead to a wave of credit downgrades in the future across the country and this could hurt households from accessing credit for things like a home or an automobile.

Since 1978, the cost of college tuition in the U.S. has soared by 900 percent.

Source