Student Loan Delinquency Still Rising

There's new evidence that recent college graduates are struggling under the mounting burden of student loan debt, which earlier this year passed the $1 trillion mark.

Equifax, one of the three credit reporting agencies, has found that student loan delinquencies and write-offs have increased significantly over the past 12 months.

According to the report, student loan write-off rates increased more than 29 percent month-to-month from June-July 2012. Student loan 60-day delinquency rates increased more than 14 percent year-to-year in the same period.

Loan balances growing

Student loan balances are also going up, rising $58.5 billion year-over-year from July 2011-2012. The total number of student loans has increased nearly 24 percent from July 2011, when there were 89 million, to July 2012 when there were 116 million.

In the first seven months of 2012 lenders have written off $9.3 billion in student loan debt, a 10 percent increase over the year before. Severe derogatory balances, which usually comes just before a write-off, are up 14 percent over a year ago.

"Student loans is one area of lending not affected by tighter underwriting standards since the start of the recession," said Equifax Chief Economist Amy Crews Cutts.

"The investment in higher education pays off over a person's lifetime, while the tuition cost has to be paid up-front, leading to big demand for student loans. Unfortunately, the current job market has not been kind to new graduates and their student loans start to come due once they graduate - if they don't have a job by the time the first installment is due, they can find themselves in quite a jam."

Other consumer credit areas improving

While student loan delinquency rates are surging, consumers appear to have a pretty good handle on their credit in other area. The Equifax reports shows that, in the July 2011 to 2012 period, auto loan 60-day plus delinquency rates declined 35 percent. Bank credit card 60-day plus delinquency rates were down 21 percent. Consumer finance 60-day plus delinquency rates declined 23 percent.

At the same time, consumers increased their use of new credit. It increased 13 percent from May 2011 to May 2012. The biggest increase in new credit was seen with bank credit cards, which was up 21 percent. It rose from $58.1 billion through May 2011 to $72.9 billion through May 2012.