Another troubling trend has emerged in the midst of the student debt crisis in America. Student loan delinquency hit record highs in consecutive quarters to finish out 2018. In the third quarter, delinquencies hit $166.3 billion, only to be topped by the final quarter of the year which saw delinquency rise to $166.4 billion.
Loans that go unpaid for at least 90 days are considered to be in “serious delinquency.” The $166.4 billion in delinquent loans at the end of 2018 represented about 11% of all student loan debt.
What’s going on?
A recent report by the Federal Reserve Bank of St. Louis asked the question of “Is College Still Worth It?” The answer was not definitive. In terms of income, college graduates still earn more than non-college graduates. In terms of wealth accumulation, however, college graduates are not doing significantly better than non-college graduates.
According to the College Board, in-state tuition and fees at public four-year institutions rose at an average rate of 3.1 percent beyond inflation over the last ten years. In the past twenty years, tuition has roughly doubled.
Unemployment rates have dipped below 4% in the U.S., but this has not led to significant wage growth. Now, income levels for graduates are not keeping up with the high cost of tuition. Tight budgets are forcing borrowers to choose between paying for food and housing or making loan payments. It is not hard to see then why many borrowers are letting their loans fall into delinquency.