Outstanding Student Loan Debt Reaches A Record Total of $1.47 Trillion
U.S. student loan debt has reached a skyrocking record of $1.47 trillion last month. According to a Bloomberg analysis of securitization data, one set of borrowers are having trouble paying back their loans. Since the recession ended in June 2009, the record had more than double amount of $675 billion.
“Over 90% of student loans are guaranteed by the U.S. Department of Education, meaning that if a recession causes a rise in youth unemployment and triggers mass defaults, this contingent liability could prove burdensome for the U.S. government budget,” said Paul Della Guardia (Economist at the Institute of International Finance)
The Bloomberg analysis concluded that loans issued from 2012 have the highest cumulative loss percentage since the financial crisis ended. The data states that students who took out loans in 2012 are having much more difficulty making monthly payments, unlike the students who received loans soon before and after.
Most of the percentage of students who took out loans are between the age of 24-33 years old. This is the age where most are establishing their careers. The borrowers in this group entered the worked force around the time when the unemployment rate was twice as high like today. It is a possibility that these individuals may have been having trouble finding a career in their field of interest. According to the Bureau of Labor Statistics, it was concluded that it took three times longer for individual to find a job in 2012 than today.
Debt by Age
Borrowers between the ages of 24-34 owed $489 Billion in the third quarter which is $530 Billion less compared to the borrowers who are between the ages of 35-49. According to the Department of Education, 1.8 million borrowers aged 62 and older owed $62.5 billion in student loan debt and borrowers between 50-61 owed $213.6 billion. The accumulated amount owned by borrowers over the age of 50 increased by 11.6% in the course of one year.
Source: Investment News
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