America's Burgeoning Student Loan Debt Crisis
More than 1 in 4 borrowers are likely delinquent in repaying their student loan debts -- much higher than the 14.6% delinquency rate suggested by previous calculations, according to a new federal report.
The 14.6% delinquency rate comes from comparing the total number of people with student loans (about 37 million) to the number of people with at least one past-due student loan account (about 5.4 million), the Federal Reserve Bank of New York said in its report.
But that undercounts the actual rate of student loan delinquencies, reports the Los Angeles Times.
That's because the conventional calculation fails to consider that federally guaranteed loans don't have to be repaid until six months after a student graduates, according to the Fed.
If borrowers with outstanding federally guaranteed loans are factored in, the rate of past-due student loan balances would jump to 27%, the Times reports.
Students with private loans are also increasingly falling behind in payments: A bit more than 5% are delinquent, which is double the rate before the current recession took hold, according to the Times.
So how much do students owe? In total, about $870 billion for outstanding student loans, the Fed reports -- more than what Americans owe for credit-card debt ($693 billion) and car loans ($730 billion).
The average student loan balance stands at $23,300, the New York Fed's report on delinquency found. But there are about 167,000 student-loan borrowers -- about 0.5% of the total -- who owe more than $200,000, the report said.
If you're facing a student loan delinquency, you may have options such as consolidation or loan forbearance. It might be a good idea to check with an attorney to see which option is best for you.
- Report on college loan delinquency rate raises alarms (Los Angeles Times)
- 5 Tips to Consolidate Student Loans (FindLaw's Law and Daily Life)
- Browse Banking & Finance Lawyers by Location (FindLaw)
- Should Student Loans be Discharged in Bankruptcy? (FindLaw's Law and Daily Life)
You Don’t Have To Solve This on Your Own – Get a Lawyer’s Help
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