Bloomberg analysis shows borrowers who secured loans in 2012 have a high rate of default.
12/17/2018 11:30
Student loan debt has doubled since the recession ended in 2009 and reached a record $1.465 trillion in November, Bloomberg reports.
Outstanding student loan debt was $675 billion at the end of the recession in June 2009, according to the article.
“Over 90 percent of student loans are guaranteed by the U.S. Department of Education, meaning that if a recession causes a rise in youth unemployment and triggers mass defaults, this contingent liability could prove burdensome for the U.S. government budget,” Paul Della Guardia, economist at the Institute of International Finance, said in the article.
Specifically, based on its analysis of student loan securitization data, Bloomberg finds that borrowers with loans issued in 2012 “have defaulted at a faster rate than any other cohort since the financial crisis.”
Many of the borrowers with loans from 2012 are now 24-33 years old and Bloomberg reports they faced high unemployment rates (twice as high as the current rate, in fact) and faced challenges to find work in their desired field.
Bloomberg also reports findings on federal student loan trends by borrowers’ age and loan amounts. Read more from the analysis here.
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