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Student loans are proving to be a much bigger burden on households than previously thought.
Nearly one in three Americans who are now having to pay down their student debt-or a staggering 31.5%-are at least a month behind on their payments, new research from the Federal Reserve Bank of St. Louis suggests. That figure is far higher than official delinquency measures reported by the Education Department and the New York Fed. And it's also likely the most accurate.
Here's why: The official measures reflect delinquencies as a share of all Americans with student debt, but millions of borrowers aren't even required to make payments yet. Many are currently in college or grad school and thus don't have to make payments until six months after they leave. Others are out of school and past that grace period but have received permission by their lender-the federal government in most cases-to suspend payments for a range of reasons, such as being unemployed.
Including these borrowers in the broader pool of student-loan debt makes official delinquency rates artificially low. For example, figures from the New York Fed's quarterly report on household credit shows roughly 17% of all student-loan borrowers were at least 30 days behind on a payment at the start of this year. That's still a very high number, but misleading nonetheless.
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Student loans are proving to be a much bigger burden on households than previously thought.
Nearly one in three Americans who are now having to pay down their student debt-or a staggering 31.5%-are at least a month behind on their payments, new research from the Federal Reserve Bank of St. Louis suggests. That figure is far higher than official delinquency measures reported by the Education Department and the New York Fed. And it's also likely the most accurate.
Here's why: The official measures reflect delinquencies as a share of all Americans with student debt, but millions of borrowers aren't even required to make payments yet. Many are currently in college or grad school and thus don't have to make payments until six months after they leave. Others are out of school and past that grace period but have received permission by their lender-the federal government in most cases-to suspend payments for a range of reasons, such as being unemployed.
Including these borrowers in the broader pool of student-loan debt makes official delinquency rates artificially low. For example, figures from the New York Fed's quarterly report on household credit shows roughly 17% of all student-loan borrowers were at least 30 days behind on a payment at the start of this year. That's still a very high number, but misleading nonetheless.
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