How bad is the student loan situation. Since the financial crisis, student loans have been the fastest or second-fastest rising form of debt. Only auto loans are close. Various reports and studies raise alarms about the unsustainable levels of debt many students have, and default rates have been rising. This article pulls together the data and arguments. It concludes that the student loan situation is worse than many people believe, and that about 40% of borrowers who entered college in 2004 will be in default by 2023.
Student debt has ballooned from $260 billion in 2004 to almost $1.4 trillion, but it’s not those numbers that spell serious problems for student loan borrowers, the report found. Instead, it’s the rapidly rising rates of people who go into default.
For people who entered college in 1996 and took out loans, the data shows, 18% had defaulted after 12 years, and more than a quarter had defaulted after 20. But those numbers jumped sharply for those who entered college in 2004: Some 27% had defaulted after 12 years, a nearly 50% increase.
If the trends continue, Brookings predicted, default rates for student loan borrowers will skyrocket to 38% by 2023.