student debt

Over the past decade, the volume and frequency of student loans have increased significantly. Nearly one in five American households had outstanding student debt in 2010, as did 40 percent of households headed by a person younger than thirty-five. As shown in the graph below, the volume of student loans grew by 77 percent from 2002 to 2012. In this same period, the average loan debt per full-time student increased by nearly 60 percent, to over $5,500.

The graph also illustrates the increasing trajectory of delinquency rates for student loans. The amount of student loans that are ninety-plus days past due, shown above as a percentage of the national loan balance, has risen by 4 percentage points over the past decade from around 6 percent to over 10 percent. Similarly, the percent of student borrowers whose loans are more than ninety days delinquent increased from under 10 percent in 2004 to about 18 percent in 2012.

Of course, delinquency rates are affected by labor-market conditions.  When jobs are scarce, it is harder for many recent graduates to repay their student loans. For instance, in 2005 theunemployment rate for twenty-five to thirty-four-year-olds who attended some college but did not obtain a bachelor’s degree was 5.4 percent. The unemployment rate for this same group had increased to 10.1 percent by 2012. The unemployment rate rose from 2.6 percent in 2005 to 4.1 percent in 2012 for individuals in this age group with a bachelor’s degree or higher. Indeed, worsening labor-market conditions in the past decade are likely to have hindered students’ abilities to repay their student loans.  That being said, higher unemployment rates are unlikely to be the only cause of rising delinquencies or of the increases in debt that had already begun before the onset of the Great Recession.