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From Delinquent To 'Seriously' Delinquent: Another Worrying Trend For Student Debt Revealed
It’s no secret that America has a $1.3 trillion student debt problem and as we’ve outlined on a few occasions recently, the actual delinquency rate for student borrowers is far higher than the (also high) 18% that’s generally reported because as The St. Louis Fed recently pointed out, it’s important to look not at delinquencies over total student loans but at delinquencies over loans in repayment and when you do the math on the latter you discover that once America’s best and brightest come out of deferment and forbearance, one in three quickly fall 30 days or more behind on their payments. In other words, the real delinquency rate (i.e. the rate for those who are actually required to make payments) is closer to 30%.
And while the Obama administration debates more “efficient” ways to allow for the discharge of this mountainous pile of bad loans in bankruptcy proceedings, some folks saw their student debt ABS put on review for downgrade at Moody’s which cites default risk on nearly $3 billion worth of paper. As a reminder, these are the deals and tranches affected:
With all of this in mind, the St. Louis Fed is out with still more evidence that the trend in student loan delinquencies is getting more worrisome by the year. Here’s more:
The Great Recession affected households in different ways, including causing people to get behind in debt payments. Student loan payments were no exception. The figures below show student loan delinquencies in the fourth quarters of 2007 (the beginning of the recession), 2010 (after the recession) and 2014 (the most recent data available). We used the fourth quarter of each year to avoid changes that may be related to the time of year.
The first figure represents a usually quoted rate of delinquency in student loans: the percent of people with student loans who are behind in their payments.
And while we already knew that, what we did not know (but probably could have surmised had we been asked) is this:
To further study student loan delinquency, the figure below shows student loan borrowers making payments late who are behind by 90 days or less. Thus, this figure represents the percent of delinquent borrowers who are not seriously delinquent.
As the figure shows, that rate remained relatively flat during the crisis, suggesting that households would stop making payments for a couple of months during the recession, then restart. During the past four years, this rate worsened significantly, dropping from 12.4 percent to 8.6 percent.
The two figures taken together suggest that although student loan delinquency has slowed over the past four years, its quality has worsened because more borrowers have become seriously delinquent.
* * *
In other words, not only are delinquency rates on the rise, so too apparently, is the percentage of delinquent borrowers who have simply stopped making payments, late or not. It's no wonder then, that we're starting to see ABS tranches at risk for not being paid down by maturity.
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Paying off student loans is a mug's game; we all know there's going to be a Jubilee on it sooner or later anyway. That which cannot be paid back will not be paid back.
Jewbilee
Another anti-Semite exposed.
AIPAC?
Prolly just one of those lying racist anti -germanic holocaust "believers"
No jubilee. Since the debt is owned by the banks, they'll get bailed out, again. It worked with real-estate, it'll work with student loans. After the bail-out, more QE.
1/2 of student loans will be delinquent and uncollectable in practical terms within 5 years MAX.
You can take that to the Taxpayer Bailout Bank.
Just when I thought the race card and sex cards being abused by the left were bad enough, you pull out the granddaddy of all political correctness -- the anti-semitism card.
Using human beings as collateral is a human rights violation.
I'm making over $7k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do... www.globe-report.com
Good luck with your jubliee...aint gonna happen.
Besides, it's the worst possible thing you could do, it's even worse than QE tbh, lets further ingrain moral hazard and you'll get even more of this kind of behavior. There will be ever more borrowing because people will know in the end that it'll all be forgiven...again and again and again.
Again....worst idea possible.
It's a scam. The tech school I went to 20 years ago was actually run by organized crime, one day they shut down, chained the doors and left all the students in the lurch. This was after they pump and dump thousands of students for loan money they couldn't afford and delinquencies reached the maximum.
Its a scam. I went to law school 10 years ago and they showed me glossy brochures that said 98% of graduates make 100k+
This I learned in law school ironically is called 'fraud in the inducmeent'.
Than when I graduated and couldnt get a job as a hot dog vendor and looked to sue,...I read that someone already HAD sued and the court said 'educational puffery in advertising is an exception to the rule of fraud and moreover, an education was proised and an education delievered....so, no fraud'.
You know its over when law schools use the law as a cloak for committing fraud. Its over peoples. OVER.
THEY LIES TO THE FISHES !!!!!
http://www.washingtonpost.com/business/economy/why-law-schools-are-losin...
Better Call Saul suggests alternative specialties.
Give um a job as a conservator, they work for free.
What were you going to do that was productive with your degree?
World peace one class action at a time.
But at least our skools gradate exceptional peeple:
U.S. Students Slide In Global Ranking On Math, Reading, Sciencehttp://www.npr.org/blogs/thetwo-way/2013/12/03/248329823/u-s-high-school...
Zing.
Thanks to the great recession we now have a bigger glut of lawyers bc half my college educated friends hid out in law school when they came to realize their English degrees left them largely unemployable.
It's an absolute scam and cash-cow for universities. The capital costs involved in running a law school are tiny. Don't need any gymnasiums, chem labs, etc. Just a few profs, a blackboard, a computer lab and a Library. And one of the main problems is the delusional student body who all think they're going to graduate at the top of their class. If you don't get into top 25% of a top 20% school you're not getting a good-paying job. End of story.
Man... I really feel like going out and taking out a shitload of student loans and betting that they will be forgiven. Gamble baby! What's the worst that can happen? My credit gets f'd up?
Only matters until "folks" can't pay experian.
Follows you to the grave..they will take it out of your social scurity, before that they will take every other year of earned income if you are a reciepient of such..between that and health care tax thats a lot of money.
They will take it out of anyone's SS that happened to be gullible enough to co-sign on a student loan. Doesn't matter if it's a person's great-grandfather, that loan will be repaid.
If this is true then things are going to get really ugly if rates rise and another recession hits. It will be a hell of a kick in the nut sack!!
Good! Starve the beast.
Make the problem so large they'll end up forgiving the loans or else decades of non-consumers.
These young adults were sold a broken load of crap. Go to school get good grades go to college get good grades get a job and be successful. Get out of scholl just to learn Oh by the way… There are no “good” jobs waiting for you and taking that crappy job plus the student debt (which by the way if you don’t pay will ruin your credit) you end up further away from accessing the “American Dream”. YAY USSA!
Currently doing my masters in CS (paid for by my company).
Can't wait to finish so I can go back to productive personal projects instead of bullshit hoop jumping.
It's all a fucking con. I'd quit if I didn't have to repay my company If I don't finish. It's literally become an opportunity cost - either I do school and write useless papers and record useless presentations, or I'd have time to build real things that provide value.
Academia is crowding out and selects against successful traits.
U.S. Steel to reduce operations further, idle more Houston jobshttp://www.bizjournals.com/houston/news/2015/04/20/u-s-steel-to-reduce-o...
They will lower rates and reduce the payback ratio that's aligned with income. They will drag it on for a long time. But they won't address cost, that's for sure.
The Fed is forced into perpetual inflation so debtors [including Uncle Sam] repay in cheaper dollars. Some sectors are seeing massive deflationary forced but overall, it's cheaper currency is what the fed wants, as all debtors want.
I suspect currency wars will heat up much more intense but timing is impossible.
The Fed is the source of all inflation, and the US Federal Government is the biggest deadbeat in history.
Has nothing to do with Sam paying in cheaper dollars (although that is an extra benefit). If they don't keep expanding the supply of money and credit, interest cannot be paid and the system collapses.
How / Why do defaulyts occur in a world of IBR?
You make no money....under IBR you owe nothing.
Do not understand where all these defaults are coming from.
There are no defaults. There is no way to get out of the debt under law. They will garnish wages.
Barista, please.
Exactly, these articles are very misleading. For another thing, almost all loans are purely Federal now. There are some private loans, but the old system of government guarantees to banks for Stafford loans and the rest is long gone. That happened about 3 years ago. Now there is no middle man, the government itself is making the loans directly. Since the government gets printed fake money, it should hardly worry anyone.
How much did the rich people print themselves with TARP and the subsequent central bank bailouts? $14 trillion in one year was it?
Why do we keep getting these articles hammering the poor when it is rich, powerful people who have destroyed the economy?
You're missing it.
easy fiat and a failure to adequately price risk has destroyed the economy.
Has the easy money gone to the ultrawealthy? Yes. But they couldn't do it without an army of idiots. And pols. And CBs.
BS. Only the rich and poweful are to blame for what they have done. Nobody else has ever had a choice.
Always have a choice.
The problem is our choices are all bad.
Doesn't mean we don't have them.
I have chosen to not go in debt for the rest of my life for a pipedream, same reason I refuse to borrow a car in exchange for my fiat.
We all have choices, choosing to believe you have no choice, thus choosing to do nothing, is STILL a choice.
Instead of concentrating on how to cheat the government by not paying back your student loans, best to focus on selling some of that yellow metal so you can pay the rent.
yep. Sell gold. Or hot college chick ass.
There is a very simple explanation why default rates keep on rising: The last 3-4 years our friendly Federal government is hinting at a "solution" to student loans and potential forgiveness....hearing all these-no wonder people are stopping to pay and wait for "the solution"..........
Promise instead harsh penalties for non payments and you will see the defaiult rates move down quickly....
Yep, it COULDN'T be that there are few, to no, jobs that would support paying back those loans, could it?
Nah, just "bad" people abusing the taxpayer (as if, our money is created, not paid).
Bet you believe in many other Statist myths too.
The increasing probability of student loan forgiveness has me feeling like a dumbass for going to a state school, obtaining an engineering degree, finding and holding meaningful employment, and paying back my loans early. I have $3.5k left out of $28k when I graduated almost three years ago.
On the Navient website, there are plenty of links to "reduce your monthly payment", but I didn't see a single one to increase it. I called them up, and said I wanted to increase my monthly payment on the last loan so I could pay it off faster. The rep actually said, "You're the first person I've heard say that. Why would you want to pay your loans off faster?"
I'm thinking I'll pay off all my debt and know I did the right thing. Which means a whole lot in these crazy times (sarc). The idea of taking out $100k in student loans and defaulting is sounding pretty nice these days...
In the same boat. Paid mine off a few years ago, but kicking myself for all the sacrifice and belt-tightening.
It seems that the irresponsible route that many of my peers were enjoying, and that I watched enviously, may have been the right path after all.
Absolutely,Peter Schiff gave this advice to me years ago and I listened. There isn't any incentive for me to pay this shit off quickly, I could pay off my student loans in a year of I wanted to but I'd rather take that cash and buy gold with it.
Student loans are welfare that has to be paid back. How ingenious is the Deep State?
In the past people would just get welfare and be done with it. Now, the fake money is shuffled to the University industry by the ton, with the hapless job-seeker as the conduit. To top it off, a bunch of fucking assholes who don't know anything then engage in finger wagging and shaming people who take loans to get non-existent jobs. It works in every way to divide, conquer, impoverish, and steal.
And nobody ever catches on.
Yes but $1.3Trillion isn't that much in the grand scheme of things.
For perspective, in SECONDS (like 1/60 of a Minute) TIME:
So how long can you put off paying? 3 of the 4 guys I went to trade school with, and work with, have been defering their payments for 3 years now. Makes me feel like a schmuck paying 20% more per month. That reminds me, time to make another monthly payment.
I seems to me that after a certain time, the .gov would just tell these fucks "Time to start paying. Anything. NOW."
I seems to me that after a certain time, the .gov would just tell these fucks "Time to start paying. Anything. NOW."
IRS can seize bank accounts and tax refunds, make them pay up to 20% of income. But they don't WANT the money: that would deny lenders the ability to add compound interest charges and late fees to their income statement, as I explain below. S&P earnings, dude, are all that matters!
Its a Bullshit scam by Obama. You are better off paying the debt, and getting off their radar. As the principal owed declines, so does the interest, look up an amortization chart at Karl's Mortgage (google it) and plug in your loan details, you'll be amazed and eager to do it.
Did not say I was not eager to make it happen. I was paying 100% more per month, but had to cut back a bit in order to not have month left at the end of the money. Hell, I finally had to spend some cash on socks, as they had become biblical, you know, holey.
All jokes aside, the faster I can get the monkey off my back the better. I actually got a much better job after trade school. Some due to luck, some to skill. Most of the people i went with are just in debt. So I keep paying, keeping my credit score on the upside in the hopes that at some point I can get a loan at a much better rate to pay off the balance. I know it is borrowing from Peter to pay Paul, but Peter has much better rates.
Or this whole shit bag is just going to explode. Note to self, finish .45-120 Sharps stat.
This is NOT a problem! Since student loan debt CANNOT be discharged in bankruptcy, the lenderz can keep the loans on their books as performing loans! They are performing by the add of usurious 8% rates, compounded on deferred loans, plus late fees, plus whatever else they need to charge to show their bottom line is just fabulous! These loans CAN'T be discharged, so they MUST be paid! And, well, who has the most SL debt? The US Govt, not private banksterz.
PS- The 2005 Bankruptcy Law change (The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005) is the one that excluded Student Loans from bankruptcy filings. It also allowed banks to shift their derivitive holdings into the depositor side of the holding company, and gave derivitives senior creditor status. It also helped Jon Corzine: Once a company files for bankruptcy, it loses its ability to sue a 3rd party for FRAUD. Ask Chris Whalen, he'll explain that unless a receiver is appointed before the filing, a trustee cannot sue for fraud.
THIS BOOST S&P EARNINGS, ITS BULLISH, CAN'T YOU SEE????
Ludicrous Speed!
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