Student Debt Nearly Tripled Over The Past Decade

http://thinkprogress.org/education/2014/04/23/3429825/student-debt-delinquency-data/



Total student debt has nearly tripled in recent years, according to new research.

Using a new dataset on various types of household debt, including student loans, research from the Federal Reserve Bank of New York found that total outstanding educational debt nearly tripled from 2004 to 2012, growing from $364 billion to $966 billion. The total rose by 14 percent each year on average. The researchers’ chart of the growth in the average loan balance per borrower shows a smooth rise from just over $15,000 to nearly $25,000 over the nine years covered by their data.

And many of those debtors are struggling to pay the money back. The official rate of delinquency — defined as being more than three months behind on loan payments but less than nine months behind — was 17 percent in 2012. But the official rate doesn’t offer as clear a picture of borrowers’ repayment struggles as it might, the researchers say, because the way it is calculated includes many people who are not yet attempting to pay down their debt. The effective rate of delinquency among those who have begun paying down their loans is up over 30 percent.

Given these rising numbers, heavily indebted college graduates are flocking to programs that link their payments to their income and eventually forgive outstanding debt, the Wall Street Journal reported Tuesday. The programs, known as Income-Based Repayment (IBR) and Pay As You Earn (PAYE), allow borrowers to make smaller payments than the standard plan would require. IBR is the less generous of the two, requiring enrollees to pay 15 percent of their discretionary income each month for 25 years before forgiving the remaining debt. PAYE uses a 10 percent cap and a 20 year timeline. If graduates work in the public or non-profit sectors rather than the private sector, debt forgiveness kicks in at 10 years instead.