Young people are more likely than ever to default on their students loans, according to a new report published Tuesday by the Fair Isaac Corp. (FICO Labs), signaling that the monstrous debt situation is worsening and will continue to plague our next generation of graduates.
“This situation is simply unsustainable and we’re already suffering the consequences,” said Andrew Jennings, head of FICO Labs. “When wage growth is slow and jobs are not as plentiful as they once were, it is impossible for individuals to continue taking out ever-larger student loans without greatly increasing the risk of default. There is no way around that harsh reality.”
Calling the report the "latest red flag" the LA Times reports, "the student-loan delinquency rate in the last three years has risen to 15.1%, up from 12.4% from 2005 to 2007 [...] That’s a nearly 22% increase."
At the same time, the average loan balances also continue to skyrocket indicating that school costs are growing even more out of reach for the average student. According to the report, "in 2005, the average U.S. student loan debt was $17,233. By 2012, it had ballooned to more than $27,253 – an increase of 58 percent in seven years."