A new report from the analysis firm Fair Isaac Corp. provides one more piece of evidence confirming that student debt is out of control. According to the report, average student debt grew 58 percent between 2005 and 2012, leaving students buried under more than $27,000 each. Delinquencies, of course, rose along with the debt load:
The delinquency rate today on student loans that were originated from 2005-2007 is 12.4 percent. The comparable figure for student loans that were originated from 2010-2012 is 15.1 percent, representing an increase in the delinquency rate by nearly 22 percent.
While the delinquency rate is climbing, the average amount of student loan debt is increasing even faster. In 2005, the average U.S. student loan debt was $17,233. By 2012, it had ballooned to more than $27,253 – an increase of 58 percent in seven years. By contrast, the average credit card balance and the average balance on car loans owed by U.S. consumers actually decreased during the same period.
“This situation is simply unsustainable and we’re already suffering the consequences,” said Andrew Jennings, chief analytics officer of Fair Issac. “When wage growth is slow and jobs are not as plentiful as they once were, it is impossible for individuals to continue taking out ever-larger student loans without greatly increasing the risk of default.” This chart shows how student loan debt has outpaced other forms of debt:
“Our evaluation of credit risk patterns also reveals that high levels of student loan debt are now riskier than before,” the report said. (HT: Zero Hedge)