February 27, 2017
Many college students graduate with student loan debt: student loans have grown 186.3% over the past 10 years compared to just 3.8% for all other forms of debt. On top of that the total student loan debt is 1.4 trillion. The good news is that Orion, and our brokers, work with various kinds of debt every day. But we think it is important to understand the big picture.
Let’s look at debt as a whole. Total household debt for Q3 rose 0.5% and 2.4% over the past year. The driver of the Q3 debt increase? Auto and student loans accounted for 83% of the quarterly increase – Orion’s brokers have seen this. There is also a break down student of student loan debt by age: Debt per borrower has risen across the age spectrum, with debt doubling for individuals age 55 and older. On top of that delinquency rates have risen in-kind and have climbed the most for older borrowers.
There are signs, however, that student loan pressures have begun to ease. Looking at it over the last year, the consumer price index for college tuition & fees is at the lowest point in series history. On top of that, for the people that already have student loans, a tighter labor market should make it easier for these people to find work with accelerating wages allowing them to pay off their loans. Student loans aren't the only loans around; mortgage loans also exist and they have some tight lending standards since the bust. In the third quarter mortgage originations to borrowers with a credit score below 720 accounted for just 24.7 percent of new mortgages compared to 47.2 percent ten years ago.
The good news is that Orion’s brokers are well versed in helping borrowers with their debt load, including student debt, as are Orion’s AEs and underwriters. Owing money is a fact of life for many, and knowing how to handle it is Orion’s specialty.