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Report: Student loan debt increased by $29B in last quarter of 2015

By Amy R. Connolly   |   Feb. 25, 2016 at 3:27 PM

WASHINGTON, Feb. 25 (UPI) -- Outstanding student loan debt jumped by $29 billion to $1.23 trillion nationwide as the number of delinquent loans remained somewhat steady in the last quarter of 2015, the New York Federal Reserve reported.

The percentage of student loan borrowers who are 90 days or more delinquent in payments or are in default rose from 11.5 percent in the third quarter of 2015 to 11.6 percent in the fourth quarter ending Dec. 31.

For comparison, student loan debt for the same time period in 2014 increased by $31 billion to $1.16 trillion, with about 11.3 percent of aggregate student loan debt delinquent or in default.

As in previous years, the Fed said the current delinquency and default rates are understated because up to half are "in deferment, in grace periods or in forbearance and therefore temporarily not in the repayment cycle."

"This implies that among loans in the repayment cycle delinquency rates are roughly twice as high, New York Fed economists said.

According to the New York Fed report, "The Graying of American Debt," debt for those between ages 50 and 80 increased by 59 percent in the 12 years between 2003 and 2015. Student loan debt balances for those in that age bracket increased 886 percent, or by $857. The feds, using Equifax credit data, found debts from mortgages, home equity loans, car loans and credit cards have remained relatively flat for most older borrowers, but student-loan debt has climbed, especially when compared to younger borrowers.

"Younger borrowers hold lower per capita balances in every debt category save student loans, and older borrowers hold higher per capita balances in every debt category save credit card debt," researchers found. "Setting aside the influence of an aging population, it remains the case that in 2015, on average, younger borrowers held less non-student debt and older borrowers held substantially more debt of nearly all types, than comparably aged borrowers held in 2003."

Overall, student loan debt remains a vital issue on the political landscape, although most of the talk is about college costs and debt burdens on young borrowers. Unlike other kinds of debt, student loans cannot be released in bankruptcy. The federal government has the power to garnish wages and Social Security for payment, putting an increased number of older borrowers at risk for financial difficulties.

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