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15 Feb ’12
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Wonder when this bubble is going to pop
Americans are struggling to make timely payments on student loans, according to new data from researchers at the Federal Reserve Bank of New York — even as we dutifully shrink other types of balances.
Student-loan delinquencies increased at the end of 2014: 11.3 percent were at least 90 days overdue in the last three months of 2014, up from 11.1 percent in the previous quarter.
Meanwhile, on the bright, if counterintuitive, side: All other forms of debt have been showing lower delinquency rates, including credit card and mortgage loans. The New York Fed did note, however, that auto loan delinquencies have largely been dropping, but rose slightly last quarter.
America’s total student loan debt is now nearly $1.2 trillion. One reason the burden is difficult to pay off, Fed researchers wrote: “Student debt is not dischargeable in bankruptcy like other types of debt … Delinquent or defaulted student loans can stagnate on borrowers’ credit reports.”
It wasn’t always like this. Student loans were the smallest form of household debt until 2009, the Fed data shows.
The recession apparently scrambled our borrowing habits. Americans shrank other debts during the economic downturn but kept taking money for college, long trumpeted as the ticket out of hard times.
19 Feb ’12
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Dumb question Why aren't student loan debts discharged?? (other than lobbyists and shady politicians). Why do they get a special exemption?
15 Feb ’12
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they've been slowly whittling away on being able to discharge student loans. In the 70's you could, in the 80's you could if you had been paying on it for 5 years, in 2005 they changed it so you could not at all, I think you nailed it with the lobbyists
15 Feb ’12
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that might change
WASHINGTON—The White House is weighing steps to make it easier for Americans to expunge certain student loans through bankruptcy, opening the door for student debt made by private lenders to be treated on par with credit-card debt and mortgages.
Federal law prohibits student loans, from private lenders and from the U.S. government, from being wiped out in bankruptcy, except in rare circumstances. Other forms of consumer credit such as mortgages, credit-card balances and auto loans face looser requirements for being discharged in bankruptcy.
President Barack Obama on Tuesday directed administration officials to study whether to expand bankruptcy options for “all student loan borrowers.” An administration official said the bankruptcy review would likely focus on whether to expand bankruptcy options for borrowers with student loans made by private lenders—such as SLM Corp. ’s Sallie Mae and Wells Fargo & Co.—that aren’t backed by the government.
Private loans make up about 10% of all student loans, with the remaining 90% made by the federal government.
Any bankruptcy-law changes would have to be approved by the Republican-controlled Congress, which has broadly opposed the president’s agenda.
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