Student loan debt is still hurting a slew of Americans, with the Federal Reserve Bank of New York saying Wednesday (May 31) that defaults are still hovering at a high rate and that a small percentage of student debt holders can’t purchase a home as a result.
According to a report in The Wall Street Journal the Fed said that more than one in 10 borrowers are 90 days or more behind on making their student loan payments. The default rate on this type of borrowing is much higher than other forms of debt, whether it’s a mortgage, auto loan or credit cards. At the same time the homeownership rates with people who graduated college is higher than with those that never earned a degree. The report also shows those with a lot of student debt are less likely to own a home than those who graduated with little or no student loans. The Fed did find that roughly 5 percent of borrowers owe more than $100,000 but account for close to a third of all the debt that is currently outstanding. The average student loan debt for graduates’ stands at $34,000, the Wall Street Journal reported, noting that is up about 70 percent from 10 years ago. “For a large share of households, housing equity is the principal form of wealth,” said William Dudley, president of the New York Fed, in a prepared statement to the paper. “Thus, changes in the way we finance postsecondary education could also have important implications for the distribution of wealth.”
Another problem hurting college graduates with student debt: Many simply don’t refinance their loans. That’s according to a recent survey conducted by Google Consumer Surveys for Student Loan Hero, which found 62 percent of student loan borrowers surveyed said they are familiar with refinancing their student loans, while 69 percent said they have never refinanced. What’s more, nearly 38 percent said they had no idea they could refinance their student loans to begin with.