More people borrowing for education are failing to pay off their loans.
Almost a third of student-loan borrowers in repayment were delinquent at the end of last year, up from about a quarter in 2008 and 20% in 2004, according to a report on household debt and credit released Thursday by the Federal Reserve Bank of New York.
The amount of educational debt, which includes federally backed and private loans taken out by students and parents, has almost tripled in the last eight years to $966 billion, the bank said. With costs to attend college continuing to outpace the inflation rate, more borrowers are struggling to pay. That makes it harder for people, especially those ages 25 to 30, to secure other types of credit, including home mortgages.
"Student loan debt is the only kind of household debt that continued to rise during the Great Recession and has now the second-largest balance after mortgage debt," wrote Donghoon Lee, an economist at the New York Fed. "With delinquent student debt, mortgage origination is very difficult."
The New York Fed report is based on a sample of data provided by the credit bureau Equifax Inc. and examines borrowers' current debt. It doesn't measure how much was taken out at origination.
About 44% of student loan borrowers aren't repaying their loans because of deferments, forbearance or continued schooling.
Delinquency rates in 2012 were highest among borrowers younger than 30 who are repaying their loans. Thirty-five percent were 90 or more days behind, compared with 21% in 2004.
The Fed also reports on the share of all borrowers who are delinquent 90 days or more, including those in deferral, forbearance or still in school. That rate is 16% for those younger than 30, up from almost 8% in 2004.
As more people attend college, the average educational loan balance and the numbers of borrowers and delinquencies are increasing. The number of student-loan borrowers was almost 39 million in 2012, up 70% from about 23 million in 2004. The average borrower's balance in 2012 was $24,700, compared with $15,308 eight years earlier.
Total student-loan debt in the fourth quarter was $966 billion, up $10 billion from the previous quarter, according to the New York Fed. The federal Consumer Financial Protection Bureau put the number at $1 trillion last year.
Student loan delinquency rate is increasing
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Student loan delinquency rate is increasing
