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Financial Planning > College Planning > Student Loan Debt

Household Debt Reaches Record $13.21 Trillion

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Household debt and credit development as of Q1 2018. Source: New York Fed

The federal government isn’t the only sector of the U.S. economy falling deeper into debt. So are U.S. households. Their total debt rose $63 billion to $13.21 trillion in the first quarter,  topping the $13.15 trillion peak in the fourth quarter and marking the 15th consecutive increase, according to the Federal Reserve Bank of New York‘s latest quarterly report on household debt and credit.

First-quarter household debt also topped by more than $530 billion the $12.68 trillion peak reached in the third quarter of 2008, in the midst of the Great Recession. And it’s almost 19% above the post-financial crisis trough reached in the second quarter of 2013.

Mortgage debt continues to be the largest component of household debt, rising $57 billion to $8.94 billion, or 0.6%, but student loan debt, the second largest component, rose more than three times as much, up 2.1%.

Student loan debt increased $29 billion to $1.41 trillion, and close to 11% of those loans were 90 days or more past due or in default as of the first quarter. That’s slightly below the level in the fourth quarter, but the report notes that the delinquency rate may be twice as high because about half of those loans are in deferment, forbearance or enjoying a grace period and therefore temporarily excluded from the repayment cycle.

Auto loan debt also increased in the first quarter, while home equity lines of credit and credit card debt fell slightly, but delinquencies among auto loan borrowers and credit card holders inched higher. Eight percent of credit card balances were 90 days or more delinquent as of March 31 — a little less than twice the 4.3% of auto loans that were 90 days or more past due.

Percent of Balance 90+ Days Delinquent by Loan Type. Source: New York Fed

On the plus side, the number consumers with a bankruptcy notation added to their credit report in the first quarter declined to 192,000 — the lowest level in the 19 years that the data has been reported. Also, the median credit score of new mortgage borrowers rose from 755 to 761.

Although mortgage and auto loan balances increased in the first quarter, originations for both declined slightly.

Andrew Haughwout, senior vice president at the New York Fed, said in a statement that the higher median credit score for mortgage borrowers reflects a shift of housing wealth “into the hands of older and more creditworthy borrowers, in part because of tight mortgage lending standards.” In addition, Haughwout said, the “increased amount of available home equity should make the household balance sheet more resilient in the event of a financial shock, though that may not be an option for low credit-score borrowers.”


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