More Students Falling Behind on Loans

The New York Federal Reserve released data this month showing that student loans are the type of debt most likely to be behind in payments. According to the Q4 Household Debt and Credit Report, 11.3 percent of student loans were delinquent (more than 90 days late or in default) in the last quarter of 2014, up from 11.1 percent in the third quarter. By comparison, 7.3 percent of credit card debt was delinquent, and just 3.1 percent of mortgages were past due.

“Although we’ve seen an overall improvement in delinquency rates since the Great Recession, the increasing trend in student loan balances and delinquencies is concerning,” said Donghoon Lee, research officer at the Federal Reserve Bank of New York in a statement. “Student loan delinquencies and repayment problems appear to be reducing borrowers’ ability to form their own households.”

According to the Fed report, by the end of last year students collectively owed $1.16 trillion in loans, up $31 billion from the previous quarter and up $77 billion from the previous year. That makes student loans the second-largest source of debt, after mortgages.

 

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