How can this be? Obama has done so much for those with student loans and his economy is making these students unable to pay their loans. I smell a bailout and left-wingers screaming higher education is a right and should be free. Obama made it easier to get student loans, with his government takeover, but hasn’t made repaying these loans a priority (see unemployment rate & Obamanomics).
We have already discussed the student loan bubble, and its popping previously, most extensively in this article. Today, we get the Q3 consumer credit breakdown update courtesy of the NY Fed’s quarterly credit breakdown. And it is quite ghastly. As of September 30, Federal (not total, just Federal) rose to a gargantuan $956 billion, an increase of $42 billion in the quarter – the biggest quarterly update since 2006.
But this is no surprise to anyone who read our latest piece on the topic. What also shouldn’t be a surprise, at least to our readers who read about it here first, but what will stun the general public are the two charts below, the first of which shows the amount of 90+ day student loan delinquencies, and the second shows the amount of newly delinquent 30+ day student loan balances. The charts speak for themselves.
Market Watch is also pointing out the student loan bubble bursting, something ZeroHedge figured out last September:
New data released today shows 11% of student loans were 90 days or more past due in the third quarter, up from 8.9% in the previous quarter and 8.8% a year prior, according to the Federal Reserve Bank of New York. It’s also the highest since at least 2003, when the bank first started tracking student loan delinquencies. “It’s a red flag and a warning sign that more Americans are struggling to repay their student loans — things are bad, really bad, and getting worse,” says Rich Williams, higher-education advocate at the U.S. Public Interest Research Group, a nonprofit based in Washington.
The latest data comes at a time when delinquencies on many other consumer debts, including credit cards and mortgages, are dropping. Overall, delinquency rates on outstanding consumer debt fell to 8.9% in the third quarter, from 10% a year prior, according to the FRBNY.