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Equifax Reports Student Loan ‘Severe Derogatory’ Balance Increase 36 Percent Year Over Year
Thursday, March 28, 2013 6:55 AM

According to Equifax's latest National Consumer Credit Trends Report, severe derogatory or charged-off balances, the bulk of student loan write-offs, for the first two months of the year hit $3 billion, an increase of more than 36 percent from same time a year ago ($1.9 billion) while balances in bankruptcy remained level at $0.5 billion.

"Driven heavily by economic factors, including unemployed or under-employed consumers going back to school along with the rising cost of tuition, student lending has demonstrated consistent, year-over-year growth," said Equifax Chief Economist Amy Crews Cutts. "Continued weakness in labor markets is limiting work options once people graduate or quit their programs, leading to a steady rise in delinquencies and loan write-offs. Many policy options are being discussed regarding how to reduce some of the burden, including graduated payments that reflect the lower starting salaries of new graduates, and improve the performance of these loans."

Other changes in student loan characteristics from February 2012 to February 2013:

  • Balances outstanding on student loans increased more than 14 percent, from $746.3 billion to $852.7 billion.
  • The number of student loans outstanding increased nearly 13 percent, from 108 million to more than 123 million.