Higher Education Bubble: Student Loan Debt Increases 275%, Delinquency Rate Up 41%


The national economic recession has had little impact on the accumulation of student loan debt, but it does appear as though things are coming to a head. Student loan debt is second only to mortgages in terms of national household debt, and delinquency rates among student loans are the highest of any sort of debt in the nation.

NEW YORK (CNNMoney) — Student loans have more than tripled over the past decade, according to new data from the Federal Reserve.

Student loan debt hit $904 billion in the first quarter of 2012, up from $241 billion a decade ago, according to the Federal Reserve Bank of New York quarterly household debt report. That’s up 275% since the same period in 2003. …

Americans are also increasingly falling behind on their student loans. Long-term delinquency rates now stand at 8.69%, up from 6.13% a decade ago.

That’s higher than the delinquency rates of mortgages, auto loans and home equity lines of credit, but still down from a peak of 9.17% in the third quarter of 2010.

That delinquency rate may actually be worse than it seems as, according to the article, almost half of America’s student loans are currently in deferment or grace periods. Typically these loans don’t have to be repaid as long as the student is still in school or unemployed.

With roughly 1 in 2 recent college graduates unemployed, we can see that the problem is probably much worse than can be measured right now.

But times are good in the higher education industry. Nationally average salary for full professors has gone up 67% since 2000, while pay for associate professors has gone up 50% according to the Chronicle of Higher Education and university administrators are raking it in as well.

Higher education faculty and administrators are getting rich while the students are sent out into the world with more student loan debt than ever before and degress that are, thanks to things like grade inflation, worth less and less.

Rob Port is the editor of SayAnythingBlog.com. In 2011 he was a finalist for the Watch Dog of the Year from the Sam Adams Alliance and winner of the Americans For Prosperity Award for Online Excellence. In 2013 the Washington Post named SAB one of the nation's top state-based political blogs, and named Rob one of the state's best political reporters.

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  • http://nofreelunch.areavoices.com/ Kevin Flanagan

    The greed of big education knows no bounds.

  • Econwarrior

    Cloward-Piven strategy.

  • WOOF

    “Nearly half of all federal student loan defaults occur at for-profit
     although the schools have only 10% of higher education students”

  • http://nofreelunch.areavoices.com/ Kevin Flanagan

    The non-profit schools don’t pay taxes, they just live high off of them.

  • WOOF

    The for profit schools live off taxes, federal student loans.
    For profit schools come up short on education and students  employment.

    • http://nofreelunch.areavoices.com/ Kevin Flanagan

      Profits are taxed many times.

    • Econwarrior

      Looks like “for profit” is just another thing you don’t understand.

      • WOOF

        Unlike you I don’t confuse profits with scams.

        • Econwarrior

          You obviously do; profits are EARNED by giving equal value to the consumer.  Since all transactions are voluntary, it’s the only moral way to do business.

  • WOOF

    States have lowered support of schools and raised tuition.
    “The average tuition for a for-profit school is about six times
    higher than a community college and twice as high as a 4-year public
    school. ”
    The education model that served the country so well is under attack by forces that want to make it unavailable for the masses.

    Profits are taxed cause it’s hard to tax losses.

    • Econwarrior

      Profits are taxed because politicians are greedy, and they represent value created.

    • http://sayanything.flywheelsites.com Rob

      I reject the premise that the current higher education model has served this country well. It has made higher education less affordable while lowering its value.

  • WOOF

    Many of the profit schools are scams and do not create value.

    • http://sayanything.flywheelsites.com Rob

      That’s between the student and the school.

      It’s a certainty that government policy has diminished the value of a college degree.

    • Gern Blanston

      Let’s go with your premise that for-profit schools are bad: what does that have to do with anything? You stated above that they comprise only 10% of the higher education population of students. You can’t tell me that THEY are responsible for the higher education bubble.  I see ridiculous growth rates in tuition sustained over 20+ years at state-sponsored schools. THAT is a result of the third-party payer mentality that has infiltrated higher-ed, with the Fed. government being the biggest of the third parties.

  • howiseeit

    The public education system continues to be preoccupied with brick & motar and bureacracy while overlooking that their students are the reason for their existence.   Until they get refocused, the system will continue to erode.  It’s a shame, especially because the folks in charge, who are obviously acedemically superior, are making the most elementary mistake.