Default rates for student loans rose to 5.4 percent in the 2nd Qtr, gathered from Moody’s Investors Service.
The data showed yearly default rates up from 5 percent in the first quarter and 4.5 percent a year ago. Major factor is high unemployment rates among grads. Much of the increase in private student loan defaults was attributed to loans that were securitized — whereby loans and other forms of consumer debt are packaged and sold to investors as bonds or other securities — in 2010, a period which also contained more delinquencies as borrowers struggled to repay their loans.
The unemployment rate for young college graduates was 9 percent in the first half of 2011, and since private student loans securitized between 2008 and 2010 hold a greater proportion of young college graduates than loans securitized in previous years, those loans have a higher default rate, according to Moody’s (“Moody’s: Private Student-Loan Defaults Tick Up To 5.4% In 2Q,” The Wall Street Journal, Aug. 17, 2011).
The data showed delinquency rates for student loans have risen; however, other consumer debts have fallen.