This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Student Debt Continues to Rocket: NY Fed

NEW YORK ( TheStreet) -- Student debt continues to climb, even as other forms of consumer debt decline, according to the latest quarterly report on household debt published by the New York Federal Reserve.

Student loans grew by $20 billion during the first quarter to a total of $986 billion as of March 31, 2013. This has been the only category of household debt to grow during the great recession and is now the biggest form of household debt next to mortgages.

The delinquency rate on student loans -- the proportion of student loans that are more than 90 days behind on their payment -- declined to 11.2% in the first quarter from 11.7% in the fourth quarter. But this figure understates the number of problem student loans as nearly half the loans are currently in grace periods or deferment or forbearance.

Excluding such loans, the delinquency rate would be higher, the NY Fed said. In an earlier study, the NY Fed found that 6.7 million borrowers or 17% were more than 90 days behind on their payments. Excluding borrowers who are not technically required to make payments because they were in a period of forbearance, nearly 30% of the borrowers were delinquent.

The average student debt per borrower stood at $24,810 as of December 31, 2012. The outstanding debt tends to be highest in the northeast states and in the south, according to the report.

West Virginia has the highest student delinquency rate at 18% , while South Dakota has the lowest at 6.5%.

About 16% of people with a credit report have student debt in the U.S, with the ratio climbing to 25% in the District of Columbia.

The sharp increase in student debt since the recession has sparked concerns of a new subprime crisis -- this time in student loans.

The rising cost of college education has made it impossible for most students to go to college without a loan. At the same time, going to college has become something of a necessity for those seeking a job in a sluggish market, although a college degree is no guarantee of employment.

Students graduating in a recession have been unable to find jobs that will help them repay their loans. Because student debt cannot be discharged through bankruptcy, many struggling borrowers remain stuck with thousands of dollars in student debt for decades.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $117.81 0.00%
FB $105.45 0.00%
GOOG $750.26 0.00%
TSLA $231.61 0.00%
YHOO $32.94 0.00%


Chart of I:DJI
DOW 17,798.49 -14.90 -0.08%
S&P 500 2,090.11 +1.24 0.06%
NASDAQ 5,127.5250 +11.3820 0.22%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs