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American Bankruptcy Institute Report: A Third of All Student Loan Debt Belongs to Subprime Borrowers

A report from the American Bankruptcy Institute dated January 31, 2013, states:

TransUnion LLC reported yesterday that about one-third of all student loan debt belongs to subprime borrowers, and a growing number of these risky loans are not being paid on time, the Wall Street Journal reported today. Nearly $300 billion of the almost $900 billion in outstanding student loans was held by the riskiest category of borrowers in March 2012. Of the subprime student loans that have come due, 33 percent were considered delinquent, a rise from 24 percent five years prior, according to the report from TransUnion LLC, released Wednesday. Subprime loans are making up only a slightly bigger slice of the student loan pie than in 2007. The dollar amount of outstanding student loans rose 75 percent between 2007 and 2012, with federal loans making up most of the increase, the report says. Over the same period, the average amount of debt held by each individual borrower rose 30 percent, to around $24,000. More than 12 percent of federal student loans were considered delinquent as of March 2012, meaning a borrower hadn't made payments for 90 or more days after first missing a payment. That is up from less than 10 percent one year earlier.

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