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High deferral rate for student loansPosted On Thu, January 31, 2013
In what may be a sign that many young people are experiencing money troubles, the rate at which students have put off paying back their tuition loans has soared to new heights.
According to recent data published by TransUnion, approximately 44 percent of student loans are in deferred status, meaning their repayment has been postponed on a temporary basis.
Something else that's increased noticeably are the debt loads of these loans. TransUnion notes that student loan balances have soared 75 percent in a five-year period - 2007 to 2012 - as the average loan debt stands at more than $23,800.
Ezra Becker, vice president of research and consulting at TransUnion, indicated that these results didn't come as a surprise, but the magnitude of the problem serves as a rude awakening.
"With the economy either in recession or slowly coming out of it during the study period, we had expected that student loan balances might increase as consumers frustrated with the job market went back to school to work toward a different career path," said Becker. "However, the rate of growth we observed was truly eye opening."
He added that while students have the ability to defer these payments for several years, it has its limits, as lenders typically enable borrowers to put off paying a debt for no more than three years.
"After that, these students can find themselves in a difficult position financially," said Becker.
One way students can ease their financial burden is through auto insurance rates. Provided they perform well in their classes, insurers will often provide them with discounts, helping to lower their annual premiums by several percentage points in some cases.
While the nation's unemployment has fallen below 8 percent, it's still high among young people. The U.S. Census Bureau notes that unemployment among Americans 25 years of age and under is at its highest rate in more than a decade.
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