August 31, 2012

Soaring student loans defy debt decline

Americans are slowly whittling down their debts and defaulting on fewer bills — except when it comes to student loans.

Debt incurred to pay tuition continued to rise, and a higher percentage was delinquent in the second quarter, according to a report yesterday by the Federal Reserve Bank of New York.

Student-loan debt rose to $914 billion last quarter — double 2006 levels. Plus, the rate of delinquencies, those 90 days late or more, rose to 8.9 percent from 8.69 percent in the first quarter, the report said.

In dollars, the level of bad student loans rose to $24.92 billion from $20.50 billion the previous quarter, the report revealed.

Perhaps just as troubling, roughly $27.14 billion in student loans went unpaid for at least 30 days last quarter — up from $23.25 billion at the end of March.

The only other category that saw a jump in “new” delinquencies last quarter was auto loans.

Student-loan levels stand in stark contrast to overall household indebtedness, which dropped last quarter by $53 billion to $11.38 trillion. At its peak in the fall of 2008, household debt was $12.67 trillion.

The improvement is largely due to declines in mortgage and credit-card debt, which had become cheap and overabundant in the boom days leading up to the Great Recession.

Credit-card balances were at $672 billion as of the end of June, their lowest levels in 10 years.

Indeed, credit-card debt is now down a whopping 22.4 percent from a peak in 2008, the New York Fed said yesterday.

Mortgage debt, too, is falling. Overall, such loans dropped to $8.14 trillion, marking the sixth consecutive quarter of declines.

The above statements do not represent those of Weston Legal or Michael Weston and they have not been reviewed for accuracy. The statements have been published by a third party and are being linked to by our website only because they contain information relating to debt. Nothing in this article should be construed as legal advice given by Weston Legal or Michael Weston. To view the source of the article, please following the link to the website that published the article. Articles written by Michael W. Weston can be viewed here: To report any problem with this article please email

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