1 Majority of Bank Risk Managers Expect Student-Loan Delinquencies to Continue to Rise | The Billfold

Majority of Bank Risk Managers Expect Student-Loan Delinquencies to Continue to Rise

“A majority of bank risk managers expect student-loan delinquencies to continue to rise.”

Percent of student loans 90 days or more delinquent:
5 years ago: 8.8%
Now: 11.4%

Number of people with two or more open student loans on their credit report:
7 years ago: 12 million
Now: 26 million

“If the defaults continue to increase, ‘the taxpayer is going to be on the hook for losses.’”

(“The federal government has taken a more active role in student lending and now makes about 93% of all loans.”)

WHATEVER IS GOING TO HAPPEN? HOWEVER MIGHT THIS TURN OUT? (I guess we’ll just have to Wait and Seeeeeeeeeeee.)


13 Comments / Post A Comment

I predict that as the economy recovers, all the student loan borrowers will get good jobs and be able to make all their payments on time without any distress whatsoever.


MuffyStJohn (#280)

@stuffisthings Is it weird that I clicked this article mostly to hear whatever meta-economic commentary you would have for me, complete with links and fabulous inflation-adjusted numbers?

You are a tease.

vicky austin (#2,938)

My federal student loans are ~5% of my take-home every month. My private loans are ~37% of my take-home. My rent is ~25% of my take-home. The only way I’m even close to being financially solvent is that my mom splits my private loan payments – and, still, I’m paying ~24% of my take-home towards my loans (on a 30-year plan). That means 49% of my net pay is spoken for (and it would be 67% if it weren’t for my wonderful mother.) I signed for the loans and they are my responsibility, and I am lucky that Mama can help and chooses to do so, but it’s a goddamn miracle that I’m not in default.

sea ermine (#122)

I wish there was some sort of…loan class that people could take in their senior year of high school (it could be for parents and students). I think don’t really understand what amount of loans is responsible to take out and how much the monthly payments will be for those loans and private vs federal loans and all that stuff. I also think that some students are focused on going to their dream school and so they become ok with accepting a higher amount of loans than is financially responsible.

I was lucky that I graduated high school in 2008, so the recession was already a thing and I could factor that in when choosing what colleges to apply to. I was also lucky that my parents told me that taking out large loans could be hard for me later on (and lucky that that one sentence was enough for me to motivate me to choose a cheaper college that wasn’t as good (academically) so that I could get a bigger scholarship). As a result, my loans are only 6% of my take home pay, which isn’t too bad (especially compared to the fact that my rent is 45% of my take home pay).

nogreeneggs (#154)

@seaermine I think about teaching this type of class all the time! I would do it for free, just so kids wouldn’t keep taking out 200k in loans thinking it would be no big deal to pay back. I just don’t really know how to go about starting this type of class, would I pitch it to high schools?

sea ermine (#122)

Also, and I should have mentioned this before, I think there should be more options for avoiding these loans for people with less…choices? Maybe that’s a bad word choice but I think the focus is on people choosing fancy expensive schools instead of a cheaper, not as good school. Because the easy solution there would go to a school that might not be as good but has a bigger endowment or gives more financial aid or whatever. But not everyone has that choice!

For example, a good friend of mine went to an in state school (with reasonable in state tuition rates), where he got a very large pell grant for all 4 years. And he just graduated with 46k in student loans. In that case, how do you prevent that? Especially when, for him, not going to college would have meant going back to the shitty farm work he’d been doing since he was 12, or, if he was lucky, food service in a town where all the businesses are dying and where it’s hard to get a job at the mall.

WaityKatie (#1,696)

@seaermine Yep, that’s the thing. Even state schools are expensive now. And, obviously not everyone on earth can go to the limited number of state schools that exist anyway. Telling people to “choose a cheaper option” might make the teller feel smug, but even “cheaper” nowadays still isn’t “cheap,” people still get stuck with debt, and what are they supposed to do about it? You need a bachelor’s degree to get virtually any job now. Our solutions should involve attacking the cost of education, not blaming the victims who are compelled to take on debt to pay for it.

MissMushkila (#1,044)

@seaermine My public university now charges 13500 for tuition for undergrad. That is before student fees, books, transportation, and housing.

It was about 11000 a year when I started (2007) and was 12500 when I graduated (2011). This is madness. And I worked during those four years of college and managed to find part-time jobs that paid $10.00. That is generous in my state where most service/mall jobs pay less. (I had a job at a work clothing store at the mall shortly when looking for a new job last summer – it paid 9.25 an hour in 2012).

I have 29,000 in student loans. I did all the “right” things: state school, worked, scholarships. I’m on income-based repayment, which has me at $68 a month. I try to pay more, but I’m afraid it will never end.

tea for all (#2,263)

tell me more about these taxpayers who will be on the hook for the defaulted student debt, who are somehow a population entirely separate from the former students defaulting on their debt… ?

MuffyStJohn (#280)

@tea for all They’re called the 1%. Tomorrow we will read an article featuring them complaining about how they can barely afford Maddeysuhn and Jeydern’s private school tuition next month after they’ve made the payment on their Bentley.

MuffyStJohn (#280)

@MuffyStJohn (I kid, I kid, they’re totally naming their daughters James and their sons Rudolph now.)

nogreeneggs (#154)

@tea for all Hello I am that taxpayer. I paid off all my student loans already, can’t wait to pay of other people’s loans! *sarcasm*

WaityKatie (#1,696)

@MuffyStJohn I believe the correct terminology is Makers. (and you, I and the rest of us would of course be the Takers.) Takers work pretty long hours, as it turns out! All that taking…

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