Student Loan Delinquency Hits 9.6%, Here's What That Means for Your Retirement

Student Loan Delinquency Hits 9.6%, Here's What That Means for Your Retirement

Briefly

"Student loan balances total $1.66 trillion, with 9.6% of those balances 90 or more days delinquent. Nearly one in ten dollars of outstanding student debt is in serious trouble, and that headline rate tells only part of the story."

"Serious delinquency at 9.6% is not a near-miss situation. Three consecutive missed payments mean credit scores have already taken the hit, and what comes next is not a strongly worded letter. Wage garnishment, tax refund offsets, and Social Security benefit reductions are all on the table, and by the end of the fourth quarter, roughly one million borrowers more than 120 days past due had already been handed off to the Department of Education's Default Resolution Group."

"When a servicer transfers accounts to default resolution, it is not a procedural step. It means they have stopped expecting to collect through normal channels, and the borrowers in that pile are well past the point where a payment plan can fix things quickly."

"Savings rates have been falling steadily, even as disposable income has risen, which means households are not struggling because they are earning less. They are struggling because everything costs more, and the gap between income and expenses has been quietly closing for two years, leaving almost no cushion for a bill that just restarted after years of forbearance."