Student Loan Default Rate Hits a Scary 11%

Student Loan Default Rate Hits a Scary 11%
~ by Michael Lombardi, MBA

Another crisis looming in the air...

Student debt is going to be the next big hurdle to deal with in the U.S.’s economic recovery. Total student loan debt currently stands very close to $1.0 trillion and defaults on these loans are increasing at an alarming rate, placing more pressure on economic growth.

In the third quarter of 2012, student loans delinquent over 90 days stood at an alarming 11%. (Source: Federal Reserve Bank of New York, November 2012.)

I expect this delinquency rate and default rate to rise. It’s not rocket science: there is no economic recovery or real economic growth. Americans are still suffering. The more they suffer, the more they fall back on their loan payments. Thus, how can students get a break?

Here is what the U.S. secretary of Education Arne Duncan said about the looming student debt crisis: “We continue to be concerned about the default rates and want to ensure that all borrowers have the tools to manage their debt. In addition to helping borrowers, we will also hold schools accountable for ensuring their students are not saddled with unmanageable student loan debt.” (Source: U.S. Department of Education, “Press Release: First Official Three-year Student Loan Default Rates Published,” September 28, 2012.)

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