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Student Loans Soar To Record $1.111 Trillion, Up 12% In Past Year
Zero Hedge ^ | 05/13/2014 | Tyler Durden

Posted on 05/13/2014 11:35:12 AM PDT by SeekAndFind

When the Fed releases its quarterly household credit report, the one item most focused on is the amount of mortgages outstanding and originated in the prior quarter, since courtesy of its monthly consumer credit updates we know that US households have largely given up charging their credit cards at the expense of non-revolving student and car loans. So here is the summary.

First, the good news: courtesy of ZIRP mortgage defaults and discharges tumbled in Q1, resulting in an increase in total mortgage debt balances of $8.17 billion, or an increase of $116 billion in the quarter. 

Now, the bad news: the increase in total mortgage balances had nothing to do with a surge in mortgage demand. Quite the contrary, as we have been reporting and as bank mortgage origination bankers have felt first hand, for whatever reason mortgage origination as a business has virtually slammed shut. The Fed confirmed as much when it reported just $332 billion in originations in Q1: well below the $452 billion in Q4, and certainly below the $577 billion a year ago.

In other words, the only reason why total mortgage balances did increase is due to a slowdown in either prepayments and/or discharges, which represents as the simple difference between Q1 originations and the change in total mortgage outstanding, tumbled to just $216 billion - the lowest in the past decade! One can be certain that absent a pick up in originations the total mortgage balances are set to tumble in the coming quarter as even this one last final refuge of the "consumers are releveraging" crowd is smashed.

But that is not to say that consumers have no interest in increasing their debt load. Quite the contrary. Because when one excludes those two conventional methods of leveraging up, credit cards and mortgages, US households are on an epic spending spree funded by, what else, student loans.

We have covered the topic of the student loan bubble extensively in the past so we won't waste more digital ink on where it comes from or what it means for the troubled US consumer, suffice to report that according to the Fed, in Q1 total Federal student loans rose by another $31 billion to a record $1.11 trillion, and up a whopping $125 billion, or 12% from this time last year.

For all the talk that the student loan bubble may have popped the demand for cheap, uncle Sam loans certainly is as strong as ever. The one places where the bubble may have popped, however, is the amount of delinquencies: at 11% it means that some $122 billion in student loans will never be repaid. And considering the Fed historically does a woeful job of accurately estimating the true delinquency rate, we would estimate that at this moment some $250-$300 billion in student debt is already 1 or more months delinquent with no intentions of ever being repaid.

 



TOPICS: Business/Economy; Culture/Society; News/Current Events
KEYWORDS: college; debt; studentloan

1 posted on 05/13/2014 11:35:12 AM PDT by SeekAndFind
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To: SeekAndFind

Yikes! Programming “the children” to be good little Marxists and communists is getting expensive.


2 posted on 05/13/2014 11:36:52 AM PDT by FlingWingFlyer (Obama's smidgens are coming home to roost.)
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To: SeekAndFind

We need to outlaw Student Loans.


3 posted on 05/13/2014 11:37:23 AM PDT by Paladin2
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To: Paladin2

How would mindless liberal youth get their degrees in Puppetry or Multicultural Gender Bias Studies Indoctrination Studies?


4 posted on 05/13/2014 11:39:20 AM PDT by rightwingintelligentsia (Democrats: The perfect party for the helpless and stupid, and those who would rule over them.)
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To: SeekAndFind
Soaring student loans + No jobs to find = Not good.
Taxpayers will be screwed again.
I don't want to hear any one say "unexpected".

5 posted on 05/13/2014 11:39:48 AM PDT by BitWielder1 (Corporate Profits are better than Government Waste)
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To: SeekAndFind

Future Unemployable Americans


6 posted on 05/13/2014 11:40:21 AM PDT by GeronL (Vote for Conservatives not for Republicans!)
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To: SeekAndFind

This is going to impact our economy in a BIG way. These up and coming CONSUMERS don’t have two nickles to rub together while crashing in Mom & Dad’s basement. They are never going to own anything of more substance than the latest i-phone or tablet, and none of them are going to be able to earn enough to support the MILLIONS on SS and Welfare.

We truly have done a disservice to the youth of our Nation.

It’s going to cave in, completely; totally unsustainable.


7 posted on 05/13/2014 11:43:26 AM PDT by Diana in Wisconsin (I don't have 'Hobbies.' I'm developing a robust Post-Apocalyptic skill set...)
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To: GeronL

The debt will be forgiven by a two year stint in bambi’s greenshirts.


8 posted on 05/13/2014 11:44:49 AM PDT by SpaceBar
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To: SpaceBar

Probably. More money down the debthole


9 posted on 05/13/2014 11:45:11 AM PDT by GeronL (Vote for Conservatives not for Republicans!)
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"The bravest are surely those who have the clearest vision
of what is before them, glory and danger alike,
and yet notwithstanding, go out to meet it."

~Thucydides




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10 posted on 05/13/2014 11:45:19 AM PDT by trisham (Zen is not easy. It takes effort to attain nothingness. And then what do you have? Bupkis.)
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To: SeekAndFind

Eliminate the federal student loan program.


11 posted on 05/13/2014 11:45:31 AM PDT by andyk (I have sworn...eternal hostility against every form of tyranny over the mind of man.)
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To: andyk

Agreed


12 posted on 05/13/2014 11:46:04 AM PDT by GeronL (Vote for Conservatives not for Republicans!)
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To: Diana in Wisconsin

There will be no inheritance to bail out the kids: Mom & Dad have been talking with The Fonz about a reverse mortgage.


13 posted on 05/13/2014 11:46:16 AM PDT by Night Hides Not (For every Ted Cruz we send to DC, I can endure 2-3 "unviable" candidates that beat incumbents.)
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To: Paladin2

We need to outlaw Student Loans.


Don’t worry; 0bommer has you beat; he’ll outlaw paying them back...it is a right, you know. We all need to work less, get a PhD in romantic literature and work at Panera.


14 posted on 05/13/2014 11:47:07 AM PDT by CincyRichieRich (A government of the people and by the people...)
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To: SpaceBar

We may well see such programs for forgiveness of student loan debt.

Under current law, it is very difficult to get student loans written off in bankruptcy. i expect an effort will be made to amend bankruptcy law to allow for these loans to be written off in bankruptcy.


15 posted on 05/13/2014 11:49:36 AM PDT by Dilbert San Diego
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To: Diana in Wisconsin

Sheesh...such pessimism. Our last of three graduated a year ago. All have excellent well-paying careers established. Two of them bought low-mileage used cars in the past few months. They bought affordable, utilitarian small SUVs, not flashy high-dollar cars. We’ve taught them to be thrifty, frugal and not live beyond their means. They all graduated with very modest student loans that will be paid off shortly. Most of their friends are in similar situations, too.


16 posted on 05/13/2014 11:57:18 AM PDT by ProtectOurFreedom
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To: SeekAndFind
Makes the unemployment numbers looks better while subsidizing leftist educators.

It would be better if we just put these kids on welfare.

17 posted on 05/13/2014 11:59:10 AM PDT by freerepublicchat
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To: Diana in Wisconsin

Truth be told, everyone was hearing nightmare stories long before this became a regular issue on the newspapers. I decided a long time ago not to take out a loan and while I don’t have my degree, I do have the ability to say I’m debt free and that alone is worth not having that piece of paper/

I run my own business (not much to show for it, but I had a late start, rough road to be blunt) and I have a roof over my head and food in my tummy and unbelievable connections. I have my own thing going and with luck, I’ll be able to end up getting a good payoff in the near future and be completely secure.

So look, there are a lot of idiots who aren’t learning from the mistakes of others, and should apparently learn it themselves. It’s been common knowledge that major name universities costs obscene amounts and instead of going to a community college or perhaps getting a real education and not a degree in Stuffed Animals and spending the majority of the time partying or participating in some self created ‘revolution.’

For all the liberality of the professors, these universities do have enviable libraries and research facilities and it’s a gold mine for anyone who wants to really learn and work on independent study and projects and then be able to end up with the well stocked resume to really get a good job, showing that you have both education and experience.

I daresay that if I end up going to one of these places, I will be building experience for myself, not partying and participating in the 60’s revival protests that infect our campuses.


18 posted on 05/13/2014 11:59:23 AM PDT by CorporateStepsister (I am NOT going to force a man to make my dreams come true)
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To: SeekAndFind

Obama’s October surprise is going to be the writing off of all college loans. You heard it here first.


19 posted on 05/13/2014 12:02:21 PM PDT by Cementjungle
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To: CincyRichieRich
Don’t worry; 0bommer has you beat; he’ll outlaw paying them back...it is a right, you know. We all need to work less, get a PhD in romantic literature and work at Panera.

You write that as if the student loan program is some sort of giveaway to students.

The people making money off of this program are professional educators. The kids amass a huge debt while professors get to pad their nest.

20 posted on 05/13/2014 12:03:01 PM PDT by freerepublicchat
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To: freerepublicchat

“...subsidizing leftist educators.”

You’ve got that right. As a future college professor, I can tell you college professors make too much.

I figured, why mess around in this career I hate, hoping to someday make 70,000/ year when I can make 120,000, with full retirement, and counter some of the trash being taught the young skulls full of mush?


21 posted on 05/13/2014 12:07:24 PM PDT by demshateGod (The fool hath said in his heart, There is no God.)
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To: SeekAndFind

well, students could stop borrowing $100,000+ to major in english at oberlin college. just sayin’


22 posted on 05/13/2014 12:07:59 PM PDT by ghost of stonewall jackson
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To: freerepublicchat

i think i’ve read the real beneficiaries are for-profit schools like univ of phoenix, but i’m no expert. them, and non-teaching staff at colleges, like administrators


23 posted on 05/13/2014 12:09:03 PM PDT by ghost of stonewall jackson
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To: Dilbert San Diego
i expect an effort will be made to amend bankruptcy law to allow for these loans to be written off in bankruptcy.

These loans are guaranteed by the federal government. So, you and I will end up paying them.

The reason student loans are excluded from bankruptcy: many students were running up a huge debt burden. Upon graduation from law school or medical school, they declared bankruptcy and started over with a clean slate.

Congress got wise to the scam, and ended it.

24 posted on 05/13/2014 12:10:58 PM PDT by justlurking (tagline removed, as demanded by Admin Moderator)
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To: SeekAndFind

Everyone’s been listering to Zer0 and expecting him to wipe all the debt out. He has a pen, you know?


25 posted on 05/13/2014 12:12:48 PM PDT by mykroar (We fight, get beat, rise, and fight again. - Nathanael Greene)
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To: GeronL
Future Unemployable Americans

Be grateful if you entered the work force in the early 80s. 1984 was an especially good year for employees. After about 1988, though, there have been fewer and fewer opportunities for job seekers.

26 posted on 05/13/2014 12:13:17 PM PDT by freerepublicchat
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To: ghost of stonewall jackson

I don’t think you can read anything but fiction. You certainly can’t write correctly. dude.


27 posted on 05/13/2014 12:17:52 PM PDT by Safetgiver ( Islam makes barbarism look genteel.)
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To: ghost of stonewall jackson

RE: well, students could stop borrowing $100,000+ to major in english at oberlin college

OK, what’s wrong with Oberlin College?


28 posted on 05/13/2014 12:21:49 PM PDT by SeekAndFind (If at first you don't succeed, put it out for beta test.)
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To: SeekAndFind

They are keeping this in the news to eventually have tax payers pay for the four years of college through national income tax. I hope this does not happen. Paying a loan back in 20 years is better than paying the “loan” back forever.


29 posted on 05/13/2014 12:34:09 PM PDT by napscoordinator (Governor Scott Walker 2016 for the future of the country!)
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To: SeekAndFind

Democrats will offer a student loan forgiveness program about 6 months before the 2016 presidential election.

Bank on it.


30 posted on 05/13/2014 12:43:41 PM PDT by Obadiah (Always remember that you're unique. Just like everyone else.)
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To: Cementjungle
Obama’s October surprise is going to be the writing off of all college loans. You heard it here first.

I was actually scanning the comments before posting exactly what you have written. I believe you are spot on with this prediction. The dems are treading water right now and they need something big for the mid-terms or they are sunk. This will, unfortunately, help them keep the Senate and "stop the bleeding" in the House.

31 posted on 05/13/2014 12:51:09 PM PDT by American Infidel (Instead of vilifying success, try to emulate it)
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To: SeekAndFind

After graduation, they’ll be objects of some of the kinds of comments in the following thread.

Tiny houses a way off the streets for Wisconsin homeless
http://freerepublic.com/focus/f-news/3154489/posts


32 posted on 05/13/2014 12:55:41 PM PDT by familyop (We Baby Boomers are croaking in an avalanche of corruption smelled around the planet.)
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To: SeekAndFind

Real estate (derivatives), investment and bankding interests say, “Oh, no. Before long, the Fed will be buying worthless student loans instead of our own worthless scams.”


33 posted on 05/13/2014 12:57:57 PM PDT by familyop (We Baby Boomers are croaking in an avalanche of corruption smelled around the planet.)
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To: SeekAndFind

When will Obama nationalized and socialize this debt and make working people who never took out this loans pay them off through more taxes.


34 posted on 05/13/2014 12:58:42 PM PDT by 1Old Pro
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To: familyop
What goes unmentioned is how the societal norm that is pushing more people into college has the same effect on low-income Americans who are most affected by the debt burden. A new Brookings Institute study finds that student debt makes up a massive portion of household income:

35 posted on 05/13/2014 1:12:47 PM PDT by SeekAndFind (If at first you don't succeed, put it out for beta test.)
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To: freerepublicchat

Don’t worry; 0bommer has you beat; he’ll outlaw paying them back...it is a right, you know. We all need to work less, get a PhD in romantic literature and work at Panera.

You write that as if the student loan program is some sort of giveaway to students.

The people making money off of this program are professional educators. The kids amass a huge debt while professors get to pad their nest.


No sir, not the case. That is not what I meant.
Please dig deeper into all the trial balloons of loan forgiveness and such that 0bummer’s camp has let up. They want to forgive any and all loans. That is what I meant. Hasn’t happened yet...as Rush says, “Don’t doubt me on this”. It’s coming.


36 posted on 05/13/2014 2:07:03 PM PDT by CincyRichieRich (A government of the people and by the people...)
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To: All

Ladies and Gentlemen, the largest vote buying scheme in world history.


37 posted on 05/13/2014 2:09:47 PM PDT by newnhdad (Our new motto: USA, it was fun while it lasted.)
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To: SeekAndFind

nothing against oberlin...just an example, expensive private school. i’m sure it’s a fine institution, but there’s not a market for english majors


38 posted on 05/14/2014 7:27:24 AM PDT by ghost of stonewall jackson
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