I am 23 and, thankfully, don’t have any student loans. I got a scholarship in college, and because of this my parents agreed to help pay for my masters degree, but I count myself among a very small proportion of recent graduates that isn’t drowning in student debt. So much debt, in fact, that 35 percent of those of us under age 30 simply won’t—or can’t—make their loan payments anymore, according to a new report from the Federal Reserve Bank of New York.
Since 2004, educational debt has nearly tripled, to $966 billion, surpassing credit-card debt, auto loans, and home equity lines of credit to take second place behind mortgage debt, with a total balance moving steadily toward $1 trillion. Even through the recession, student debt showed no signs of stopping.
“Student loan debt is the only kind of household debt that continued to rise during the Great Recession and has now the second-largest balance after mortgage debt,” write Donghoon Lee, an economist at the New York Fed, according to Bloomberg News. “With delinquent student debt, mortgage origination is very difficult. The mortgage origination gap across the size of student debt has declined between 2005 and 2012.”
At the end of last year, almost 17 percent of borrowers were more than 90 days late on payments. Take away those who have deferred payments or are still in school, as illustrated above, and nearly a third of all borrowers were delinquent. And those most at fault are my peers—the percentage of people under age 30 who are defaulting on loans has increased more than that of any other age group in the past eight years.
That shouldn’t come as a shock. The lousy economy encouraged plenty of 20-somethings to go to college, stay in college, or double down on an advanced degree. When they finally graduated, they struggled to find the well-paying jobs they needed to make their payments. At the same time, college costs continued to rise and rise. Under these circumstances, perhaps the real surprise is that the number of delinquent borrowers isn’t higher.