The Federal Reserve Bank of New York on Tuesday said that the loan delinquencies of students rose at the end of 2014, signaling towards a troubling trend that the Americans are unable to keep up with the payments amid the climbing education debt.
The data, which was released on Tuesday by the New York Fed, showed 11.3 percent of students’ loans were delinquent in the last three months of last year. This was up from 11.1 percent in the previous quarter.
The auto loans share at least 90 days overdue increased to 3.5 percent from 3.1 percent in the previous period, even as lesser credit card and loan payments of mortgage were late.
In an e-mailed statement, Donghoon Lee, research officer at the New York Fed, said, “Although we’ve seen an overall improvement in delinquency rates since the Great Recession, the rising trend in student-loan balances and delinquencies is worrying. Student-loan delinquencies and repayment issues appear to be lowering the ability of borrowers to form their own households.”
The student-loan balance of the country jumped by USD 31 billion to USD 1.16 trillion last quarter. This makes it the biggest debt source after mortgages, which added USD 39 billion to USD 8.2 trillion in the fourth quarter. The auto-loan debt rose by USD 21 billion to USD 955 billion.
The balances of education loan have been skyrocketing over the past decade.
The outstanding debt of student stood at USD 363 billion during the first quarter of 2005, which is nearly a third of the current level.
According to the New York Fed, the levels of education debt delinquency have dropped since 2013 when the rate had reached 11.8 percent, yet remain higher from nearly six percent a decade ago.
The student loans delinquency rates likely understate the actual situation, according to the Fed report.