Student Loans Delinquency: Quarterly analysis of 2014.
The United States, largest economy of the world, has been struggling with huge amount of debts. The nationwide total of household debts which consist of mortgage loans, student loans, auto loans and credit card loans has reached approximately $ 12 trillion. Although mortgage loans account for the largest portion of the total household debt , student loan has the highest percentage of delinquency among all the loans, and shows a continuous increase in total loan balance. Millennial are having a tough time paying off their student loans. According to the latest report of Federal Reserve Bank Of New York, as of December 31, 2014 Student loans showed a $ 77 billion increase from the previous year. Approximately 11.3% of the total student loans balance have been 90 or more days delinquent. Let’s have a look at the quarterly student loan statistics of 2014.
Quarter 1: At the end of 1st quarter reports showed alarming results with an increase of $ 31 billion in student loans compared to last quarter of 2013 . As of March 31, 2014, the total student loans balance was $ 1.11 trillion, 11% percent of which was 90 or more days delinquent. This figure is considerably higher than 3.3% delinquency percentage in auto loans and 3.7% in mortgage loans.
Quarter 2: Obama announced his plan to the pay as you earn repayment plan in June 2014, which was covering approximately 5 million more borrowers. This was certainly a consolation for many borrowers. The 90 days or more delinquency percentage decreased to 10.9% , which was still way more than 3.3% and and 3.4% for auto and mortgage loans respectively.Student loan balance increased $7 billion to reach 1.12 trillions by the end of June 30, 2014.
Quarter 3: Third quarter brought another$ 8 billion with it, and the student loan balance reached $ 1.13 trillion. Despite the change in Federal Student Loan program, which allowed some borrowers in default to come out of the default by making 9 payments in 10 months period, 90 or more days delinquency percentage increased to 11.1% , as compared to 3.1% and 3.2 percent for auto and mortgage loans.
Quarter 4: Even the fourth quarter did not show any positive sign and the delinquency percentage increased even further with 11.3% of the student loans balance being 90 or more days delinquent, while auto and mortgage loans were at 3.5% and 3.1% delinquency percentage respectively. Out of $11.83 trillions of total household loans balance, $ 1.16 trillion was student loan, which was $31 billion more than the previous quarter.
The below graph shows a continuous increase in student loans balance during 2014.
The below graph shows the 90 days or more delinquency percentage throughout the year for student loans, mortgage and auto loans.
Despite the introduction of new plans and changes made in existing programs, last year has not shown great student loan statistics. The next report by Federal Reserve bank Of New York will give the real picture. Looking at Student Loans history one can not depend entirely on Government. There is much easily available private sector help in Student loan industry, which has professionals who are well versed with Student Loan process and norms. Borrowers can take advice from these Student Loan experts for choosing the best repayment plans and obviate being a defaulter.