Recently released statistics by the Federal Reserve are causing some to wonder if the rapidly escalating rate of troubled college loans indicate a bursting debt bubble. Tyler Durden of Zero Hedge has this post; John Hayward at the Human Events Blog has this excellent comment on the Zero Hedge analysis.
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Student debt is a problem that is hurting many people over age sixty:
In the first three months of this year, the number of borrowers of student loans age 60 and older was 2.2 million, a figure that has tripled since 2005. That makes them the fastest-growing age group for college debt. All told, those borrowers owed $43 billion, up from $8 billion seven years ago, according to the Federal Reserve Bank of New York.
Almost 10 percent of the borrowers over 60 were at least 90 days delinquent on their payments during the first quarter of 2012, compared with 6 percent in 2005. ….
Some are losing part of their Social Security retirement benefits. Read about a “boomerang” parent – in this case, a mother who had to move in with her daughter due to college loans assumed by the parent on behalf of the child. See the story. (The focus here is “Parent Plus” loans not co-signed loans.)
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Another story discusses the drag that student loan debt may have on the housing market:
Naroff said another major factor weighing on young adults is student loan debt, which is approaching $1 trillion by some estimates. The burden of those monthly payments may be keeping some younger adults from paying the rent on their own, let alone buying a house, even if they do have a job.
“You have a lot of the kids coming out with debt, and they’re not going out and buying houses, and that may be pushing out the whole process,” he said.
Naroff said it’s not yet clear how much of the problem is a cyclical one, caused by the high unemployment rate among young adults, and how much is a structural problem caused the increased burden of student loan debts leaving less money for things like homes.
You can find the NBC News story by Alison Linn here.