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Student Loans, the Next Big Threat to the U.S. Economy?

Fed economists are increasingly concerned about the surge in student loans
43 percent: Share of 25-year-old Americans in 2012 with student debt, up from 25 percent in 2003
43 percent: Share of 25-year-old Americans in 2012 with student debt, up from 25 percent in 2003Photograph by D. Hurst/Alamy

Tiffany Roberson works for the state of Texas as a parole officer, teaches part-time, and is living with her parents after having completed her master’s degree. She’s held off marrying her boyfriend of four years and starting a family because she owes more than $170,000 in federal and private student loans that she took out to pursue her education in criminal justice. “I’ve never gone into default,” the 30-year-old says. “What really hurts is people say I’m a bum for living at home.”

Stories like Roberson’s are sadly common in the U.S. Student loans today are one of the only deteriorating pockets of consumer credit, with balances and delinquency rates rising to record highs even as a strengthening economy allows Americans to reduce total borrowing. Outstanding student debt topped $1 trillion in the third quarter of 2013, and the share of loans delinquent 90 days or more rose to 11.8 percent, according to the Federal Reserve Bank of New York. By contrast, delinquencies for mortgage, credit card, and auto debt all have declined from their peaks.