Skip to content

Student Loan Delinquency Rates Aren’t Getting Worse

Tuesday, April 21, 2015

The high levels of student loan debt have received considerable attention and are a constant focus of debate. A recent essay, published by the Federal Reserve Bank of St. Louis, illustrates that student loan delinquencies don’t appear to be rising.

Senior Economist Juan Sánchez and Research Associate Lijun Zhu, both with the St. Louis Fed, found that the share of student loan borrowers that are delinquent for 30 days or more increased from 11 percent to 17 percent over the period 2004-2012. Over the past two years, the rate has remained relatively stable. They wrote, “We conclude that the delinquency rates are high, but the evolution over the past 10 years seems less problematic.”

Sánchez and Zhu also examined the delinquency rates of student loan borrowers that were actually in repayment status.1 About 55 percent of student loans were in repayment in the fourth quarter of 2010, for example, while the delinquency rate was about 15 percent for all student loan borrowers. This implies a delinquency rate of 27.3 percent for borrowers with loans actually in repayment, which is much higher than for any other type of debt.

Over the past 10 years, the share of loans in repayment has risen from about 47 percent to reach 55 percent. In other words, the share of loans not in repayment decreased from 53 percent to 45 percent. Sánchez and Zhu concluded, “This decrease confirms our earlier indication that the trend in delinquency is not as problematic as it seems. Because more loans are in repayment, one would expect an increase in the delinquency rate measured as a ratio of all student loan borrowers.”

Notes and References

1 Typically, student loan payments aren’t required of borrowers who are still in college. These situations make up the bulk of the loans considered “not in repayment.” Other loans with “not in repayment” status include loans in deferment or forbearance. 

Additional Resources

Posted In Financial  |  Tagged juan sanchezlijun zhustudent loans
Commenting Policy: We encourage comments and discussions on our posts, even those that disagree with conclusions, if they are done in a respectful and courteous manner. All comments posted to our blog go through a moderator, so they won't appear immediately after being submitted. We reserve the right to remove or not publish inappropriate comments. This includes, but is not limited to, comments that are:
  • Vulgar, obscene, profane or otherwise disrespectful or discourteous
  • For commercial use, including spam
  • Threatening, harassing or constituting personal attacks
  • Violating copyright or otherwise infringing on third-party rights
  • Off-topic or significantly political
The St. Louis Fed will only respond to comments if we are clarifying a point. Comments are limited to 1,500 characters, so please edit your thinking before posting. While you will retain all of your ownership rights in any comment you submit, posting comments means you grant the St. Louis Fed the royalty-free right, in perpetuity, to use, reproduce, distribute, alter and/or display them, and the St. Louis Fed will be free to use any ideas, concepts, artwork, inventions, developments, suggestions or techniques embodied in your comments for any purpose whatsoever, with or without attribution, and without compensation to you. You will also waive all moral rights you may have in any comment you submit.
comments powered by Disqus

The St. Louis Fed uses Disqus software for the comment functionality on this blog. You can read the Disqus privacy policy. Disqus uses cookies and third party cookies. To learn more about these cookies and how to disable them, please see this article.