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Fed Student-Loan Focus Recognizes Threat to U.S. Economy

By Regina on 1/14/2014
“I’ve never gone into default,” the 30-year-old said. “What really hurts is people say I’m a bum for living at home.”

Federal Reserve economists are trying to determine whether people like Roberson represent a trend that will damage U.S. growth, partly by restricting sales of houses and cars. Student loans 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 education debt exceeded $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.

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