A recent FICO study revealed that student loan debt has increased substantially and that default rates on student loans are on the rise, due in part to a difficult labor market.
Nearly 12 million American consumers had two or more open student loans in 2005, a figure that rose to 26 million in 2012. In 2005, consumers with open student loans carried an average of $17,233 in debt, though that number has increased by 58 percent to $27,253, LowCards.com reports.
Additionally, the percentage of Americans with student loan debt exceeding $100,000 increased from 0.2 percent in 2005 to 0.8 percent in 2012. Approximately 1.2 million more Americans have borrowed more than $100,000 in student loans since 2005.
Loan delinquency rates also increased for student loans, with 25 percent of student loans between October 2010 and October 2012 were least 90 days overdue, a 47 percent increase from the period between 2005 and 2007.
“This situation is simply unsustainable, and we’re already suffering the consequences,” Andrew Jennings, the chief analytics officer at FICO, said, according to LowCards.com. “When wage growth is slow and jobs are not as plentiful as they once were, it is impossible for individuals to continue taking out ever-larger student loans without greatly increasing the risk of default. There is no way around that harsh reality.”