Total U.S. student loan debt eclipsed the $1.2 trillion mark in the third quarter of 2015, the Federal Reserve Bank of New York reported Thursday.
Of that total, 11.6 percent was more than 90 days past due, an uptick from earlier in the year. Student debt delinquency is now worse than mortgage delinquency was during the worst period of the housing crisis.
Other statistics from the report, taken from a set of Equifax credit data, indicated that the country is recovering from many of its debt problems, student loans aside.
In particular, foreclosures hit a 17-year low. Home loan balances grew by a healthy $144 billion in the quarter, and mortgage delinquencies continued to fall. Overall, delinquency on all kinds of debt has continued to fall steadily throughout 2015.
Nevertheless, the student loan picture has not improved, and has even gotten worse, even as unemployment has ebbed.
That may be because the large wave of students who tried to wait out the recession by going to college, and took out loans to do so, is still just now starting out in the workforce and is trying to keep up with repayment. Many of those nontraditional students went to low-quality schools that did a bad job graduating students and preparing them for the workforce.
Student borrowers who complete college very rarely have trouble paying off debt, even with the recent acceleration in the growth of college costs.
But during the financial crisis, enrollment spiked and completion rates fell. The National Student Clearinghouse reported this month that the number of people entering school in the teeth of the recession in 2009 grew 8 percent to 2.9 million, reflecting a large increase in older students. Six years later, however, just 53 percent had graduated, a marked decrease from earlier years.
Loan counselors have noted that student borrowers often don’t prioritize paying off student loan debt relative to other payments, such as auto loans. Student debt is very difficult to have removed through bankruptcy, meaning that the backlog of student loans in default are not likely to be written down the way bad home loans were over the course of the recovery.
