But don’t worry. The market is up, we’re at a 5.6% unemployment rate, so the fact that not even half of student borrowers can afford their college debt is nothing to worry about. It’s not like we need young people to buy houses or start businesses. No, no, everything is just fine in the crony economy. So long as the professors get paid that’s what really matters.
(From The Washington Examiner)
Of the group that left school in 2009 with only $1,000 to $5,000 in debt, nearly 60 percent either have been delinquent, have defaulted (meaning that they fell 270 days behind on a payment), or have balances larger today than they were in 2009, because of deferrals or other delayed-repayment programs. Many of those troubled borrowers are non-graduates who took out some debt but then did not finish college and accordingly missed out on higher-paying jobs that could have helped them handle their loan payments.
Many people with starting balances over $50,000 or $100,000 also had higher balances today than in 2009. Those were more likely to be students who got professional degrees and then used income-based repayment programs, which cap payments as a share of income and then eventually forgive the debt after 20 or 25 years. That could ultimately prove financially advantageous for those borrowers, but in the meantime, the New York Fed notes, those borrowers’ credit scores will suffer as their loan balances aren’t getting paid down.