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Student Debt Bubble Delinquencies Surge

Tyler Durden's picture


By now, the bubble in student loans is becoming more widely understood. The absolute level continues to rise significantly and growth is accelerating with 8% YoY growth just reported, via the WSJ. Of course the reasons are anathema but attending college on the back of hope of a better-paying job when everyone else is also attending college in that hope (thanks to endless student-loan funding from your helpful government) seems to be self-defeating as the supply of supposedly better-qualified workers into a stagnant economy will do nothing but reduce higher-end wages further? Of course this is over-simplified but as the rest of the country delevers, pays down credit cards, or BKs, those that remain jobless heading to college for a way out are now struggling also - as is clear from WaPo this last weekend where dropout rates are increasingly dramatically. What is more worrisome is that while every other class of debt, according to the New York Fed's data, is seeing delinquency rates dropping, Student Loans 90+ days delinquent surged in Q1 to 8.7% - near its peak crisis highs and remains above peak mortgage delinquency rates.

Student Loan Debt is growing while the rest of the household sector is delevering...

But pressures from repayments and the debt overhang causing dropout rates to soar...

but even as the supposedly better-educated leave college, jobs are few and far between and delinquency rates are surging - even as every other form of household debt sees lower delinquency rates...

and from the NY Fed:

The New York Fed also released historical student loans figures, by quarter, dating back to the first quarter of 2003 as part of this quarter’s report. These data show that student loan debt has substantially increased since 2003, growing $663 billion. Outstanding student loan debt surpassed credit card debt as the second highest form of consumer debt in the second quarter of 2010.


Student loan debt continues to grow even as consumers reduce mortgage debt and credit card balances,” said Donghoon Lee, senior economist at the New York Fed. “It remains the only form of consumer debt to substantially increase since the peak of household debt in late 2008.”


Additionally, 90+ day delinquency rates for student loans steadily increased from 6.13 percent in the first quarter of 2003 to its current level of 8.69 percent. They remain higher than that of mortgages, auto loans and home equity lines of credit (HELOC).

Is it any wonder the youth are disillusioned as they become the new middle class, with little opportunity and instead of a mortgage, a huge student loan around their necks? Perhaps all those calling for a housing bottom should consider who the bottom of the rung first-time homeowner is and how much more debt they are starting with now before calling the 'all-clear'.

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Thu, 05/31/2012 - 13:26 | 2480310 mrktwtch2
mrktwtch2's picture

you knew what your were signing and its your own fault for not getting a marketable major..

Thu, 05/31/2012 - 13:27 | 2480317 rumblefish
rumblefish's picture

I'm gonna make it big with my humanities major. Look out world!

Thu, 05/31/2012 - 13:38 | 2480374 Manthong
Manthong's picture

How much student debt did the Stoner-In-Chief, Barack Choombama pile up to get his PhD?

Thu, 05/31/2012 - 13:46 | 2480424 lemonobrien
lemonobrien's picture

i believe he used affirmative action.

Thu, 05/31/2012 - 13:50 | 2480435 flacon
flacon's picture

Honorary degree's are free, especially Nobel Peace Prizes. Intellectuals love prizes. And letters after their name.

~ Flacon, MA, BSc, PhD, CPA. 

Thu, 05/31/2012 - 13:51 | 2480452 Pladizow
Pladizow's picture

What % of student loans are paid off?

Thu, 05/31/2012 - 13:57 | 2480481 metastar
metastar's picture

Slave College.

Go to college. Be a good debt slave.

Thu, 05/31/2012 - 13:58 | 2480491 flacon
flacon's picture

Harvard University: rejected commercial


Thu, 05/31/2012 - 16:13 | 2480580 The Big Ching-aso
The Big Ching-aso's picture



Becoming delinquent on student loans prepares U 4 real life after U leave your parents house during your 40's.

Thu, 05/31/2012 - 17:01 | 2481166 Ahmeexnal
Thu, 05/31/2012 - 14:29 | 2480658 Dingleberry
Dingleberry's picture

cool vid flacon....

Thu, 05/31/2012 - 13:47 | 2480429 UP Forester
UP Forester's picture

None.  It, and all the "field work" in the AfPak region was paid for by the CIA....

Thu, 05/31/2012 - 13:53 | 2480464 BandGap
BandGap's picture

He got a JD (law degee), not PhD.

We'll never know what his grades were at any college he attended, much less who backed him financially.


Thu, 05/31/2012 - 14:57 | 2480752 Manthong
Manthong's picture

At least we have documentation of his exceptional "roof hits" and "Total Absorption" school performance.

I wonder if there are Harvard Law School case studies that covering those subjects.

Thu, 05/31/2012 - 13:39 | 2480383 FlyoverCountryS...
FlyoverCountrySchmuck's picture

If you have a degree in Gay/Lesbian Hispanic Lit., and $90K in College debt, you might be an Obama voter....

Thu, 05/31/2012 - 13:51 | 2480448 lemonobrien
lemonobrien's picture

i like reading pornography 

Thu, 05/31/2012 - 14:15 | 2480588 flacon
flacon's picture

...what, like John Maynard Keynes' "General Theory"? It is truly orgasmic!

Thu, 05/31/2012 - 15:09 | 2480797 MachoMan
MachoMan's picture

like braille pornography or what?

Thu, 05/31/2012 - 15:14 | 2480819 lemonobrien
lemonobrien's picture

like "two hispanic lesbians and a gringo."

Thu, 05/31/2012 - 17:01 | 2481165 Id fight Gandhi
Id fight Gandhi's picture

New ABC sitcom?

Thu, 05/31/2012 - 13:51 | 2480450 bdc63
bdc63's picture

... might? ...

Thu, 05/31/2012 - 13:54 | 2480460 Winston Smith 2009
Winston Smith 2009's picture

Stupidity is not the exclusive characteristic of stereotypical Democratic voters, but it is the domain of anyone who continues to believe in and vote for either of the major political parties.  They are both owned, just not by you.

Thu, 05/31/2012 - 13:55 | 2480473 crawldaddy
crawldaddy's picture

if you are a window washer with a lottery ticket and think you are going to make it big, you may be a republican

Thu, 05/31/2012 - 14:13 | 2480578 El Tuco
El Tuco's picture

Where does one get that degree... Harvard?

Thu, 05/31/2012 - 13:54 | 2480467 Cone of Uncertainty
Cone of Uncertainty's picture

Three humanity majors didn't like your comment.

Thu, 05/31/2012 - 16:41 | 2481102 Poetic injustice
Poetic injustice's picture

You can make big in Greece or Spain, telling that food is not all that important, but 17th century French artists are.

Thu, 05/31/2012 - 13:28 | 2480323 ACP
ACP's picture

Juvenile turned adult delinquencies bitchez!

Thu, 05/31/2012 - 13:30 | 2480343 wolfnipplechips
wolfnipplechips's picture

Why worry about mounting student loan debt when Barry and tribe will just bail them out.  Free money bitchez!!!

Thu, 05/31/2012 - 13:37 | 2480366 dwdollar
dwdollar's picture

And give them freedom from debt slavery with no strings attached? Not going to happen.

Thu, 05/31/2012 - 13:37 | 2480372 FlyoverCountryS...
FlyoverCountrySchmuck's picture

The Messiah has spoken. College should be FREE, so why should these people bother paying for student loans?

Thu, 05/31/2012 - 13:42 | 2480407 youngman
youngman's picture

That is exactly what they are thinking...that Obama will bail them out....they have no plans and never did of paying this back...these are the tokk 10 year for a 4 year liberal arts majors....the party boys and girls...the Choombas......

Thu, 05/31/2012 - 13:47 | 2480431 LetThemEatRand
LetThemEatRand's picture

If they took 10 years for a 4 year degree, they must have also been psychic if they were expecting O to bail them out.   

Thu, 05/31/2012 - 17:02 | 2481169 Id fight Gandhi
Id fight Gandhi's picture

Tribe won't bail anyone out but their own.

Thu, 05/31/2012 - 13:41 | 2480404 AL_SWEARENGEN

The US is backwards these days.  Judge Moriarty sentances this girl to jail and fines her for be truant as she works two jobs and goes to school full time.  These cocksuckers are OUT OF CONTROL.


Thu, 05/31/2012 - 13:59 | 2480496 LetThemEatRand
LetThemEatRand's picture

What a shock.  The judge is a "law and order" guy.  "With a successful tenure in law enforcement including 21 years with the Houston Police Department and 10 years with the Montgomery County Sheriff’s Department, Judge Moriarty reminds himself daily, “I am a human first and a law enforcer second.”  http://www.texas-ec.org/members/localpages/midsouth/mids0207.pdf


Thu, 05/31/2012 - 15:35 | 2480895 pods
pods's picture

If you have to tell yourself that on a daily basis, you are a sociopath.


Thu, 05/31/2012 - 14:04 | 2480525 LetThemEatRand
LetThemEatRand's picture

And he's a classic "do as I say, not as I do" guy as well. http://montgomerytx.countymonitor.com/files/2009/05/tec_moriarty_reso.pdf


Thu, 05/31/2012 - 14:21 | 2480622 HarryM
HarryM's picture

Hey we're stealing their futures , they're just stealing a little back.

We're all screwed anyway - Go for It!!

Thu, 05/31/2012 - 13:30 | 2480331 LawsofPhysics
LawsofPhysics's picture

I am sure the lenders (paper-pushers) were "forthcoming" about all the details.  Besides, "risk" is something that is to only be shouldered by those who cannot afford to buy a congressional seat.  FAIL.

Thu, 05/31/2012 - 13:47 | 2480427 Ahmeexnal
Ahmeexnal's picture

Travis, you are only half right. Paper pushers are like drug pushers. Those weak of mind fall for the illusion.
Sadly, young people are easy prey to those who claim only "experts" are allowed to run the show, thus they plunge head first into the hellish pit of debt serfdom in order to obtain a fiat paper that claims they are certified "experts" in the dog and pony show.

Thu, 05/31/2012 - 14:15 | 2480569 LawsofPhysics
LawsofPhysics's picture

Who is Travis?  Unfortunately in the physical sciences one does actually have to be trained, now you don't actually expect those private corporations who profit from the labor of those engineers to actually pay for it now do you?  Compensation for valuable labor is what this is all about, period.  If the monetary system itself has no accountability then this becomes impossible.  That is where we are and shall remain until the rule of law and contracts is restored, period.

Thu, 05/31/2012 - 14:21 | 2480625 Ahmeexnal
Ahmeexnal's picture

There you go. You nailed it.
Trained monkeys is what we have at the helm.
You can't "train" people to think and innovate, only to obey and follow like a lemming.

Thu, 05/31/2012 - 14:25 | 2480646 LawsofPhysics
LawsofPhysics's picture

Once again, you prove to be the idiot that you are.  Someone else want to explain to this moron that you can't actually innovate anything if you can't even do simple math, I have work to do.  The only lemming around here is you.

Thu, 05/31/2012 - 14:46 | 2480710 GeezerGeek
GeezerGeek's picture

The proponents of AGW working for the IPCC seem to have been trained to suck on the government teat. Whether they were trained in real science is quite something else.

Thu, 05/31/2012 - 14:09 | 2480558 MachoMan
MachoMan's picture

the only "detail" that might be unknown or that should have been made incredibly clear was the nondischargeability of the debt...  other than that, a lender has no duty to warn you of ill economic conditions... 

Thu, 05/31/2012 - 14:14 | 2480586 LawsofPhysics
LawsofPhysics's picture

...that the lender creates.  - FIXED.    Restore the fucking rule of law and contracts already.

Thu, 05/31/2012 - 15:11 | 2480803 MachoMan
MachoMan's picture

the lender is not vested with that responsibility...  or, even if it is, that does not discharge the responsibilty to pay nor whether a contract was formed...  [note, the lender is responsible for payment of the debt to third parties].

Thu, 05/31/2012 - 15:30 | 2480876 LawsofPhysics
LawsofPhysics's picture

you misunderstood.  The lender was intentionally driving the economy into the ditch (while making the loans and betting against other loans - housing) by knowingly viotating 200+ years of contract law.  Bull fucking shit the lender has "no responsibility".  Have not even mentioned "due diligence".  Gee, you act suprised that people are doing whatever the fuck they want in an environment were there is no rule of law.  Shit, I though "machoman" was tougher than that.  Guess I was wrong.

Thu, 05/31/2012 - 16:34 | 2481080 MachoMan
MachoMan's picture

There isn't one (1) single lender...  same with mortgages... 

And yes, the rule of law has been perverted...  but, of course, the rule of law has always been about protection of certain persons, not particularly about the sanctity of the human spirit nor right for right's sake...  in this context, I think "no rule of law" means that capital formation is virtually impossible...  which is correct.

The game is about changing the law to legalize your behavior...  and there are some players that are really, really good at the game.

Thu, 05/31/2012 - 16:41 | 2481103 Panafrican Funk...
Panafrican Funktron Robot's picture

I dated a hot girl back in the day a few times, but she turned out to be a real snarky bitch.  

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