Have you heard of students in law school and medical school racking up over $100,000 (or much more) in school loan debt? It is now not that uncommon for students exiting undergraduate school to graduate with student loan debts of $50,000 or higher. And many of these graduating students have no shot of making more than $10.00 an hour for the time being. New data from the Federal Reserve Bank of New York is showing that student debt continued to grow and the United States is on its way to having $1 trillion in student loan debt.
The latest Quarterly Report on Household Debt and Credit shows that student loan debt reported on consumer credit reports reached a whopping $904 billion during the first quarter of 2012. Here is the worst part of it: that was up by $30 billion from the fourth quarter of 2011. If this 3.4% stays static, student debt will hit $1 trillion by the end of 2012.
There is something else to consider… Student loan delinquencies are likely to understate actual delinquency rates. The reason is that almost half of these loans are currently in deferment or in grace periods, which means that they are temporarily not in the repayment cycle. If you use the data provided in March by the New York Fed, it is implied that loans in the repayment cycle have delinquency rates which are roughly twice as high.
The total amount of loans is based on a random sample of people on a national basis from the credit bureau of Equifax Inc. (NYSE: EFX). Fair Isaac Corporation (NYSE: FICO) had a lower figure back in January, but it projected that studentloans will be the next casualty of a sluggish economy. In late May, SLM Corp. (NASDAQ: SLM), or Sallie Mae, reported that the average college graduate who borrows presently faces approximately $25,000 in student debt.