Posts Tagged ‘student loans’

Consumer Borrowing Slows in June

Posted on August 10, 2017 by Laura Lam

Consumer borrowing slowed a bit in June from the torrid growth in the prior month, but continued at a solid pace, according to government data released Monday.  Total consumer credit increased $12.4 billion in June to a record seasonally adjusted $3.86 trillion, posting an annual growth rate of 3.9%, according to the Federal Reserve.  This is down from a revised $18.3 billion gain in May, which was the strongest rate in six months. Consumer borrowing slowed a bit in the second quarter as a whole, continuing a trend in place since last fall. Credit rose at a 4.5% annual rate…

American Households Spend 53% of Its Income On These Expenses

Posted on May 19, 2017 by Laura Lam

If there’s one fairly steady theme over the past couple of decades, it’s that consumers are saving less of their income and their household budgets are being pushed to the limit.  According to the St. Louis Federal Reserve Bank’s February data, the personal saving rating in America was a paltry 5.6%. Comparatively, U.S. workers were socking away more than 12% of their paycheck 50 years ago.  At the same time, a number of household expenses have largely outpaced the inflation rate and wage growth. These include healthcare costs, college expenses, and in recent years housing costs, since home prices have…

Fannie Mae Changes Affect Borrowers With Student Loans

Posted on May 11, 2017 by Laura Lam

Fannie Mae has recently outlined changes in the way lenders can qualify potential borrowers who have student loan debt.  The policy change is designed to make it easier for more consumers to qualify for mortgages, in part by excluding some non-mortgage debt for income-to-debt calculations.  These debts can be things like installment loans, student loans, and other monthly debts as defined in the company’s mortgage lending guide. According to the Fannie Mae web site, “If the lender obtains documentation that a non-mortgage debt has been satisfactorily paid by another party for the past 12 months, then the debt can be excluded from…

Millennials’ Debt Load Could Weigh Down Economy

Posted on May 09, 2017 by Laura Lam

Millennials — 21 to 34-year-olds — hold an estimated $1.1 trillion of the country’s $3.6 trillion in consumer debt, according to UBS, as rising student and auto loans outweigh a drop in mortgages.  All that rising debt is coming with rising default risks. A UBS evidence lab survey found that 52% of people worried about defaulting on any loan over the next 12 months were in the 21 to 34 age group. That’s not good news considering those same individuals are meant to be the largest source of spending on big-ticket purchase items like houses and cars over the next year.  There is already…

Over 40% Students Don’t Make School Loan Payments

Posted on April 26, 2017 by Laura Lam

More than 40% of Americans who borrowed from the government’s main student-loan program aren’t making payments or are behind on more than $200 billion owed, raising worries that millions of them may never repay.  The new figures represent the fallout of a decade-long borrowing boom as record numbers of students enrolled in trade schools, universities and graduate schools. While most have since left school and joined the workforce, 43% of the roughly 22 million Americans with federal student loans weren’t making payments as of Jan. 1, according to a quarterly snapshot of the Education Department’s $1.2 trillion student-loan portfolio. About 1…

Commercial Credit Is the New Mortgage Credit

Posted on September 17, 2015 by Saldutti

In the wake of an unprecedented U.S. housing bust that evolved into a global financial crisis, the business of bundling home loans that aren’t backed by the American government into bonds that can be sold to investors has all but disappeared.  It’s a point underscored by Laurie Goodman, director of the Housing Finance Policy Center at the Urban Institute, in a paper titled: “The Rebirth of Securitization: Where Is the Private-Label Mortgage Market?” Sales of residential mortgage bonds that don’t come with any sort of government backing have fallen off a cliff in the time period, while issuance of other types of debt has been…

The Staggering Costs of Student Loan Debt

Posted on July 10, 2015 by Saldutti

The numbers are staggering: more than $1.2 trillion in outstanding student loan debt, 40 million borrowers, an average balance of $29,000.  It’s not hard to find indications that student debt is a large (and growing) problem. But unless you or someone you love holds student loans, it can be hard to feel the problem’s immediacy.  That may not be the case for long. Mounting student loan debt is ricocheting through the United States, now affecting institutions and economic patterns that have been at the core of America’s very might. Men and women laboring under student debt “are postponing marriage, childbearing,…

9 Myths About College and Student Loans

Posted on July 08, 2015 by Saldutti

Student loans can turn a blessing – a good education – into a burden.  Financial planners have seen many families struggle to repay educational debts while their marriages, mortgages and careers hang in the balance. It’s a familiar problem that’s plaguing the nation, as total student loan debt now exceeds credit card and auto loan debt. So what can Americans do about it? Best-selling author and syndicated radio host Dave Ramsey advises that you stop believing these 9 lies about higher education. He suggests that once you get disprove these myths, you will start to realize that no debt is…

The Student-Loan Problem Is Worse Than We Thought

Posted on May 12, 2015 by Saldutti

Student loans are proving to be a much bigger burden on households than previously thought.  Nearly 1 in 3  (31.5%) Americans who now have to pay down their student debt are at least a month behind on their payments, according to new research from the Federal Reserve Bank of St. Louis.  That figure is far higher than official delinquency measures reported by the Education Department and the New York Fed. It’s also likely the most accurate. Here’s why: The official measures reflect delinquencies as a share of all Americans with student debt, but millions of borrowers aren’t even required to make payments yet. Many are…

Falling Behind: Grim Outlook for Student Loans

Posted on April 22, 2015 by Saldutti

More borrowers are failing to make payments on their student loans five years after leaving college, painting a grim picture for borrowers, according to the Federal Reserve Bank of New York.  Student debt continues to increase, especially for people who took out loans years ago. Those who left school in the Great Recession, which ended in 2009, had particular difficulty with repayment, with many defaulting, becoming seriously delinquent or not being able to reduce their balances, said the New York Fed. Only 37% of borrowers are current on their loans and are actively paying them down, and 17 percent are…