Much of Student Loan Debt is Not Being Paid Back, According to a Recent Report

The percentage of unpaid debts in the U.S. isn’t nearly as dismal as it was a few years ago—or even last year—except for one type of debt: student loans.  While the percentages of total consumer debt fell this year, as well as delinquency rates for that debt, student loan debt has been steadily growing for the past 8 years, with delinquency rates on the rise, as well.  In whatever way you look at it, the outlook isn’t a positive one.

From a report released in September, outstanding student loan debt now totals $956 billion and is still rising.  Approximately half of that amount is new student loan debt that is being taken on, while the other half is defaulted loans that are now showing up on credit reports across the country, affecting the credit of thousands of Americans.  It is now calculated that some 11% of student loans are now 90 days delinquent, which is considered “serious delinquency” by most credit standards.  In addition, many student loans are in deferment based on the debtor’s circumstances or continued enrollment in school, so these rates could be even higher once deferment periods end.  Since deferment is a limited prospect, it remains to be seen what will happen when it ends for the hundreds of thousands who have taken out more in student loan debt than they can afford to pay back. 

Since student loan debt is one of the few types of debt that cannot be discharged in bankruptcy, it remains to be seen what effect student loans will have on the economy if the default rate continues to rise.  Meanwhile, collections agencies and collections attorneys are watching closely to see just what role they will be playing in the process and whether student loan debt will be the next big debt bubble to hit our nation.  

What is the current situation with student loans in default in the United States this year?

Medical and Student Loan Debt Sales Growing Explosively

Image via citytowninfo.com

It’s a bit of an understatement to say the sale of student loans and medical debts are on the rise. The amount of student loans and medical debts being sold to collection agencies is surging. Why are we seeing this surge happening and what does it mean for lenders of these loans?

There are a few huge obvious reasons why student loan and medical debt sales are rising so rapidly. At a very base level, we’re buying more of these debt cases because there are simply far more people with student loans and medical debts than ever before. More people are going to colleges and universities than attended a decade ago, and we have more sick people than ever before. Not only is the Baby Boomer generation entering years of near-constant medical care and attention, but children are coming down with degenerative diseases and other illnesses at unprecedented rates. An increase in student loans and medical debts will naturally correspond with an increase in sales of those loans and debts.

Yet there are other factors at work here. Students have been taking on HUGE loan burdens over the last decade as tuition costs have spiked and financial aid has dwindled. Medical procedures are increasing in price as well, and the number of procedures, tests, and prescriptions the average individual undertakes has grown at the same time. The price of an education or of receiving medical care is greater than ever, and most people can’t afford either without taking on some level of debt.

Combined with a high unemployment rate and a less-than-stellar economy, it’s understandable why we’re seeing such a surge in student loan and medical debt sales these days. In fact, we expect this trend to escalate in the coming years. We won’t be surprised if, in five years, the majority of our cases are student loan or medical debt purchases!