Americans Falling Behind on Student Loan Repayments
Economists are perplexed about why more Americans are falling behind in their student debt repayments compared to a year ago. Most economists agree that the U.S. economy has improved since then, which should decrease—not increase—loan delinquencies.
According to the U.S. Department of Education, the percentage of Americans who are at least 31 days past their due date for student loan payments jumped to 18.8%, as of June 30. In absolute terms, about 3.3 million Americans have missed their loan payments.
In the same period a year ago, the percentage of Americans who were late on their student loan payments by at least a month was about 18.6%. That means about 320,000 more Americans have become delinquent on their student loans since last year.
This is the first increase in student loan delinquencies in the country after three straight years of declines. Economists have been unable to pinpoint the reasons behind the sudden rise in delinquencies, considering the current economic conditions.
We at America Closed have previously reported that student loan debt has hit record-high levels in the United States. Since 2007, student loan balances have skyrocketed, jumping 150% in the last decade. Meanwhile, delinquencies have also jumped, with 11.2% of student debt at least 90 days in default in the second quarter of this year.
The American millennial generation is the one that’s most heavily burdened by student debt, which is forcing many young people to delay large financial decisions.
The average American millennial is estimated to carry a student debt load of about $41,200 while only earning about $38,800 annually. A large majority of these millennials do not own a home, and are delaying buying one primarily because of their student loans. A big majority is also postponing continuing education or getting married for the same reason. About 60% of American millenials are unable to save for retirement.
“More Americans Are Falling Behind on Student Loans, and Nobody Quite Knows Why,” Bloomberg, September 28, 2017.