At A Glance: Student Loan Debt

At A Glance: Student Loan Debt
  • Opening Intro -

    One way that college students pay for their education is by taking out student loans.

    When done judiciously, such loans can help students complete their education and go on to successful careers, earning enough money to pay off their debt.

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Student loans can be a financial albatross for some students, especially for those that rely heavily on such loans to further their education. Instead of borrowing a few thousand dollars per year to close the gap between what their education costs and the money that they have on hand, some students rely nearly exclusively on student loans especially for graduate or doctorate work.

Economic Snapshot

The Federal Reserve Bank of St. Louis has released its latest “economic snapshot” of student loan debt, revealing just how much college debt some students are carrying. Moreover, its data has revealed delinquency rates by state, debt levels by age group and other trends that have pushed up the national total student debt level to nearly $1 trillion.

As the Fed report reveals, the average student loan debt per borrower across states varies with only Wyoming reporting average student debt of under $18,000. Average debt is highest in California, Illinois and across much of the east coast, with students leaving college with at least $25,000 in debt.

Student Loan Trends

Delinquency rates vary across the country too with those rates highest in Nevada, New Mexico, Oklahoma, Texas, Mississippi, South Carolina and Florida. At least 14 percent of grads and former students are behind on their loans. Notably, Florida is also one of the states where student debt levels are the among the highest in the nation.

Perhaps most revealing about student debt is the student loan balance by age group. For its study, the Fed looked at debt for the third quarter of 2011 when the total loan balance was $870 billion. Those under age 30 have 33.9 percent of all debt followed by 32.8 percent of students that are in their 30s. The 30s is when many people are married and raising families, perhaps unable to afford homes and new cars because of deep student debt.

Student loan debt doesn’t disappear quickly for older Americans either. Some 16.4 percent of the debt is held by people that are in their 40s and 11.3 percent by people that are in their 50s. Even people in their 60s and older may be paying back on loan debt acquired when they were much younger or by obtaining a degree later in life. People in the 60s and over category held 4.2 percent of all student loan debt in 2011 or $36.54 billion.

Billions Past Due

Of the $870 billion in loans outstanding as of 2011, $85 billion was past due. Nearly 60 percent of that delinquency affected people below age 40 with most of the remaining 40 percent ascribed to people in their 40s on up.

Student loan debt cannot be discharged in bankruptcy, therefore it stays with borrowers until it is paid off. Student loan debt also puts pressure on young couples including those that marry with one or both spouses in debt. Indeed, the Minneapolis Star-Tribune recently featured the story of one young couple that has married with a combined student loan debt approaching $60,000.

Outstanding loans may be one reason why people are delaying marriage or, if married, finding that their marriages are straining under a mountain of debt. Money problems are, unfortunately, one reason why some marriages fail.

Interest Rate Relief

Attacking student loan debt is left up to the borrowers to handle. However, some assistance with student loan interest rates may be possible if President Obama’s proposed 2014 budget request to Congress is accepted. In that request, the president has has that student loan interest rates be aligned closer to market rates, specifically to what 10-year U.S. treasury notes are paying.

See Also — Trillion Dollar Student Loan Debt: Much Ado About Nothing?

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