Student Loan Default Rate Inching Upwards
Student debt loans spell a certain collapse for the US. Now over $1 trillion, the only industry the loans are helping is debt collection. There is a proverb which reads: “a little bit of debt is the borrowers’ problem, while a lot of debt is the lenders.” And student loans represent a lot of debt. The percentage of student borrows who defaulted on their federal student loans within two years of their first payment jumped to 9.1% in fiscal year 2011, up from 8.8% the previous years, according to Department of Education data released Friday. Therefore, of the 4.1 million borrowers required to begin payments on their student loans in the 12 months prior to October 2010, 375,000 defaulted before September 2011. A borrower falls into default upon missing payments for 270 consecutive days. 13.4% of borrowers defaulted within three years of their first payment, according to the first three-year report published by the Department of Education. Starting in 2014, the Department will release solely three-year rates. 218 colleges and universities nationwide had three-year default rates of more than 30%.
Since 2007, default rates have been increasing. For-profits (the most expensive schools) averaged a 22.7% three-year default rate, the highest among schools, while public schools came in second with an average three-year default rate of 11%. Private, non-profit institutions had a rate of 7.5%.
A recent probe by the Senate education committee reported that 54% of for-profit students dropped out without a degree during the 2008-2009 school year, and also found that bachelor’s programs at for-profits cost 20% more than at public schools, and associate’s degrees cost four times more.
And, with student debt loans still exploding, and an economy that is increasingly worse for the wear as central banksters across the planet try to inject the illusion of liquidity into the heart of the narrative, a hyperinflationary-deflationary spiral remains in the cards. The Powers That Be, to be sure, considering the level of debt in the nation (including student debt), might be playing their cards in such a way so as to ensure deflation, for in deflation the debt becomes worth more.
In just this century, student debt has skyrocketed 500%:
Student loans are an excellent example of how the modern lending system manifests ancient modes of control. In the United States, long before the modern student loan, for the promise of prosperity thousands of individuals came to the New World as indentured servants. Once they arrived in ‘America,’ ‘twas their job to work to pay off their sail across the pond, an endeavor which lasted years and a decision most young men did not make for themselves. Instead, their fathers worked out the terms and signed the legal papers, handing custodianship of son over to ship captain. Sound familiar?
In the last decade, as student loan debt increased, so too did the price of silver. Both trends are poised to continue over the medium term. (5 years+)
First up is a chart based on New York Federal Reserve data for household debt. The red line on this chart represents the cumulative growth in the issuance of student loans since 1999. The blue line demonstrates the growth of all other household debt minus student loans.