Fed Says Student Loans Soar Even as Consumers Cut Debt

Student loan delinquencies at 8.9 %

Failure rate down from 9.2 % in 2010

Delinquent student loans just 6 % in 2003

Student loans rise to $904 billion in March from $293 billion in 2008

U.S. households are shedding debt at a relatively impressive pace. Except, that is, for student-loan debt.

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A new report from the Federal Reserve Bank of New York finds that total household debt has fallen by $1.5 trillion as of March from its peak in the third quarter of 2008, or a pace of about $150 billion in debt reduction per quarter. That $150 billion, by the way, helps explain why this expansion has been so anemic; think of it as the amount that is being siphoned out of household income to pay off debts or piling up at banks as non-performing loans.

In any case, U.S. households are making some progress to clean up their balance sheets. Except, that is, in the case of student-loan debt. Outstanding educational debt stood at $904 billion as of March, according to the N.Y. Fed; it has risen by $293 billion since 2008.

That $904 billion figure is one of the more specific attempts to pin down the total size of student-loan debt, which some agencies, like the Consumer Finance Protection Board, have previously estimated at roughly $1 trillion in size. There is much concern about high debt levels among younger people in particular, and default rates in the double-digit range already in some cases, which could worsen if job prospects don’t turn up decisively soon.

In light of this, the N.Y. Fed also released historical data for student loan debt that was not broken out separately in the past. The figures show that student loan debt outstanding has more than tripled in size since 2003, when the total amount was only about $240 billion. Indeed, student debt surpassed credit-card debt as the second-biggest form of U.S. household debt in mid-2010, according to the N.Y. Fed’s report.

As for delinquencies, the proportion of student loans that were 90 days or more overdue rose to 8.69 percent as of the first quarter. This compares with a delinquency rate of about 6 percent back in 2003, and as the N.Y. Fed notes it is a higher delinquency rate than for almost any other form of consumer debt, including auto loans and even mortgages. If there is any good news, it is that the student-loan delinquency rate has at least dropped from its all-time high of about 9.2 percent in late 2010.

In fact the rate for mortgages only exceeded student loan debt for 6 months.

-By CNBC's Kelly Evans
Follow Kelly Evans on Twitter: @kelly_evans