Wednesday, August 17, 2011

Outstanding Student Debt Soars, While New Grad Salaries Drops to $27K

The Federal Reserve Bank of New York says that outstanding student debt has climbed a whopping 25 percent since 2008.

It s now $550 billion! All other types of consumer debt, including mortgage debt, credit card debt, auto loans and home equity loans, are lower today than it was in the fall of 2008.

The even wrose news is that the loans aren't being paid on time. In Q2 2011, the rate of student loans that were more than 90 days past due rose from 10.6% to 11.2%.
The Huffington Post says that experts have warned for years that "a bubble may be developing in higher education, as students take out loans to pay for tuition and then find themselves hamstrung by debt and unable to find a job once out of school.

The problems of student-loan delinquency and default are only expected to get worse. Salaries and employment rates for recent college graduates have dropped: The median starting salary for a member of the class of 2009 or 2010 is only $27,000, down from $30,000 a couple of years ago. A recent report from Moody's Analytics predicted that over the next few years, "many students will be unable to service their loans as income growth falls short of borrowers' expectations."

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