The Odd Statistics of Student Loan Delinquency

For indispensable reporting on the coronavirus crisis, the election, and more, subscribe to the Mother Jones Daily newsletter.

Suzy Khimm notes today that student loan delinquency rates are continuing to rise:

As USA Today notes, outstanding student loans have now hit a record high of more than $1 trillion, and “Americans now owe more on student loans than on credit cards,” according to the new data. Since the peak of the crisis in 2009, they’ve become increasingly able to pay off their credit cards and mortgages. But the student loan debt crisis has continued mostly unabated.

There’s something a little odd here, though. The big spike in 2002 is almost certainly an artifact, possibly due to a change in the interest rate structure of student loans that was scheduled to take effect in 2003 but then repealed in 2002. So ignore that. But take a look at a couple of other things:

  • Even now, the 90-day delinquency rate is lower than it was during the boom years of the late 90s.
  • The other categories of loans all started showing suddenly higher delinquency rates starting in 2007-08, a sign of financial distress. But ever since the 2002-03 spike, student loan delinquency rates (as well as default rates) have been rising steadily. Whatever’s happening, it’s not really due to the recession. Just eyeballing the numbers, it doesn’t look like the growth in delinquency rates changed at all after 2008. It just kept growing at its usual rate.

So what’s going on? Well, credit card delinquencies are probably declining because banks have cut off a lot of credit. Mortgage delinquencies are probably falling because homes are being foreclosed. HELOCs and auto loan delinquencies haven’t fallen at all, just like student loans.

I’d like to see the cost of college remain reasonable, especially the cost of public universities, and I think the growth in student loan debt is probably a bad thing overall. I want to motivate more kids to go to college, not put in place incentives not to. Still, the delinquency problem for student loans doesn’t really appear any worse than for any other kind of loan, and compared to the 90s it’s actually better. It’s possible that the 2002-03 spike has misled us by artificially pushing delinquency rates temporarily below their natural level. If it weren’t for that, student loan delinquency rates might have looked pretty flat over the past decade. More analysis, please.

DOES IT FEEL LIKE POLITICS IS AT A BREAKING POINT?

Headshot of Editor in Chief of Mother Jones, Clara Jeffery

It sure feels that way to me, and here at Mother Jones, we’ve been thinking a lot about what journalism needs to do differently, and how we can have the biggest impact.

We kept coming back to one word: corruption. Democracy and the rule of law being undermined by those with wealth and power for their own gain. So we're launching an ambitious Mother Jones Corruption Project to do deep, time-intensive reporting on systemic corruption, and asking the MoJo community to help crowdfund it.

We aim to hire, build a team, and give them the time and space needed to understand how we got here and how we might get out. We want to dig into the forces and decisions that have allowed massive conflicts of interest, influence peddling, and win-at-all-costs politics to flourish.

It's unlike anything we've done, and we have seed funding to get started, but we're looking to raise $500,000 from readers by July when we'll be making key budgeting decisions—and the more resources we have by then, the deeper we can dig. If our plan sounds good to you, please help kickstart it with a tax-deductible donation today.

Thanks for reading—whether or not you can pitch in today, or ever, I'm glad you're with us.

Signed by Clara Jeffery

Clara Jeffery, Editor-in-Chief

payment methods

We Recommend

Latest