streettalklive.com / By Martha C. White / Friday, November 30, 2012
A new report from the Federal Reserve Bank of New York delivers generally positive news about the economy with one glaring exception: student-loan debt. The amount of debt and delinquencies are climbing, and some experts say the official numbers don’t even capture how big the problem really is.
In the third quarter, there were fewer foreclosures, increased credit-card and auto lending (indicators of rising consumer confidence), and an overall drop in our collective debt load, led by decreasing mortgage debt.
Student loans are another story. We added $23 billion in new debt, and the 90-day delinquency rate rose to 11%, at a time when most other types of delinquencies are going down.
“Increasing delinquency rates are a very troubling sign,” says Deanne Loonin, an attorney and director of the Student Loan Borrower Assistance Project at the National Consumer Law Center. “The problem is in part due to the poor economy, but on the federal loan side, also underutilization of flexible repayment options such as income-based repayment.”
Some struggling alumni don’t know about the programs, she says, while others get stuck in a web of red tape. (The Consumer Financial Protection Bureau has borrower information and a repayment-assistance tool on its website where you can find out what kind of loan you have and what repayment options might be available.)
