After increasing for 11 straight quarters, aggregate household debt toppled the previous peak in 2008, reaching a total of $12.73 trillion in the first three months of 2017, according to a quarterly report released Wednesday by the Federal Reserve Bank of New York. That total is 14 percent above the valley formed by the drop in household debt that followed the Great Recession, the result of a decrease in borrowing in the wake of the credit collapse.
That’s not necessarily a bad thing, as the New York Times noted soon after the Fed report’s release. It signifies consumers’ greater access to credit, a harbinger of healthy economic growth and activity. But the report also harbored a real cause for concern, specifically for millennials. While aggregate student loan debt only made up 11 percent of the total — compared to mortgages, with 68 percent of household debt — the average delinquency rate for student loans has shot above all other forms of debt in recent years, and stayed there, according to the Fed report.
The rise in aggregate mortgage loans may represent a comeback for the housing market, as that delinquency rate has plummeted to below 4 percent from its 2009 peak of over 12 percent. For serious delinquencies, or those of at least 90 days, the rate is closer to 1 percent, the Fed found.
Student loans, by contrast, continued a dramatic rise in delinquencies that began about a dozen years earlier, with the rate of missed payments lingering around 10 percent today, up from around 8 percent in 2004. The rate of student loan delinquencies longer than 90 days has come close to 10 percent as well, up from under 6 percent in 2004. In terms of delinquency rates, the student debt category was followed by auto loans, with below 8 percent, and credit cards, with about 6 percent.
There is a litany of reasons for the disparity, according to Melinda Kay Lewis, an…