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The share of Americans at least 31 days late on loans from the U.S. Department of Education ticked up to 18.8 percent as of June 30, up from 18.6 percent the sa
by qntty 9y ago
The share of Americans at least 31 days late on loans from the U.S. Department of Education ticked up to 18.8 percent as of June 30, up from 18.6 percent the same time last year
Is this newsworthy?
- bigheadpercoli 9y agoThe uptick isn't. But if 1/5 student loans are more than 30 DPD, that will be a problem.
- tyrw 9y agoHonest question: why is 1/5 that much more of a problem than 18.8%?
- bigheadpercoli 9y ago~18.8% is roughly 20% or every fifth student loan in the country. If 20% of your portfolio can't repay it's debt that's usually a bad portfolio. In a simplified model : Assume you give 100 dollar to five people with the intent to earn 5 dollar on interest of each (total 25 dollar interest income.) If now one of them can't pay back the 100 dollar you lose the 100 dollar and the five dollar interest income. So instead of 25 dollar income you get (20-100-5 = -85 dollar). To avoid this situation you start calling the guy (collections activities). Effecting your earnings again. Of course one months in arrears is not immediately the road to immediate doom, but it is an early warning indicator. Especially if you look into trends to understand the behavior of the portfolio. In this case the early-stage delinquencies have been improving since 2014 and starting 2017 reversed that trend. So if the trend continues this portfolio segment will grow again leading to more losses and collection activities.
- godelski 9y agoJust for some perspective mortgage delinquency rages (90+ days overdue) were highest at 11.5%[1]. But there's a lot of factors to consider, so I wouldn't necessarily say this is the sign that the bubble is going to pop soon. [1] https://fred.stlouisfed.org/series/DRSFRMACBS https://fred.stlouisfed.org/series/DRSFRMACBS