A National Problem: Over 55% of U.S. Counties Have Over 10% Student Loan Delinquency Rate

With a slimmed down student aid reform bill now awaiting President Obama's signature, perhaps the conversation in Washington can now pivot to addressing the challenges facing student borrowers. 

The Federal Reserve has recently updated their U.S. Credit Conditions website, which posts county-level data on the percentage of student loan delinquencies greater than 60 days.

Before getting to the maps, I thought some summary statistics would be helpful in showing the pervasiveness of the issue.  First, over 55% of the over 2,800 counties analyzed had a 60 day delinquency rate on student loans over 10% (this is comparable to the 56% figure from the 3Q 2009 which I posted last year).  Here is the distribution of 60 day delinquency rates based on the percentage of counties that fell within a given range (so, 6.9% of counties had a delinquency rate under 5.0%):

	Percentage of
Rate	Counties
Under 5%	6.9%
5.0-9.9%	37.5%
10.0-19.9%	51.1%
20.0%-29.9%	4.1%
Over 30%	0.3%

Here were the ten counties with the lowest reported delinquency rates:

County	State	Rate
Putnam County	Illinois	0.0%
McHenry County	North Dakota	0.0%
Hancock County	Tennessee	0.0%
Jefferson County	Nebraska	0.6%
Morgan County	Utah	0.8%
Saguache County	Colorado	0.9%
Clarke County	Iowa	1.2%
Kearney County	Nebraska	1.3%
Richland County	Montana	1.5%
Teton County	Wyoming	1.6%

Here were the ten counties with the highest 60 day delinquency rates:

County	State	Rate
Madison Parish	Louisiana	29.9%
Houston County	Tennessee	30.4%
Tensas Parish	Louisiana	30.9%
Huerfano County	Colorado	31.0%
Telfair County	Georgia	31.4%
Twiggs County	Georgia	33.3%
Caldwell Parish	Louisiana	33.6%
East Feliciana Parish	Louisiana	37.1%
Sharkey County	Mississippi	40.4%
Jefferson County	Oklahoma	49.0%

Here are the states sorted based on the median of the delinquency rate for the counties in that state:

	Median
State	Delinquency Rate
South Dakota	5.7%
North Dakota	6.0%
Minnesota	6.3%
Massachusetts	6.7%
Nebraska	7.0%
Rhode Island	7.0%
New Jersey	7.2%
Connecticut	7.3%
Wisconsin	7.3%
Maine	7.5%
Wyoming	7.7%
Iowa	7.8%
Maryland	8.2%
Utah	8.3%
Washington	8.4%
New York	8.4%
Oregon	8.5%
Pennsylvania	8.6%
Hawaii	8.7%
Illinois	8.7%
Vermont	8.9%
New Hampshire	9.0%
Idaho	9.3%
Colorado	9.5%
California	9.6%
Kansas	9.7%
Alaska	9.8%
Michigan	9.8%
Virginia	10.0%
Montana	10.1%
Delaware	10.4%
Ohio	10.9%
Missouri	11.0%
Nevada	11.6%
Indiana	11.7%
Kentucky	12.0%
North Carolina	12.0%
Georgia	12.1%
West Virginia	12.2%
Florida	12.4%
Texas	12.4%
Arizona	13.2%
Tennessee	13.3%
Oklahoma	13.4%
Alabama	13.5%
New Mexico	13.7%
South Carolina	13.8%
Arkansas	14.7%
Louisiana	14.8%
Mississippi	16.0%

Here is data from 4Q 2009 with the intensity of blue indicating a higher percentage of defaults in a given county.  Ten percent of the counties were excluded given their small populations and are shaded yellow on the map. The darkest blue sections seem to be in the southeast and southwest with the midwest and northeast having lower delinquency rates.  

Here is the year-over-year change with the intensity of the red color reflecting a the increase (or decrease) in 60 day delinquencies over the past year.  While there are pockets of green, the overall picture is blinking red as more students are struggling with their student loan payments given the weak job market. 

Anyone interested in county-level detail for this analysis, please contact me at [email protected]

Comments

[C. Cryn Johannsen]

I am glad you have said he ought to turn his attention towards borrowers - I've been posting the same things over and over again on Education Matter. But my latest piece is about that - http://alleducationmatters.blogspot.com/2010/03/deafening-silence.html

-Cryn Johannsen
Founder of Education Matters

[Craigie]

This includes private/alternative education loans.

[Bizzaro Watchdog]

Yes the plight of the borrowers. Well, here's an idea that is sure to be controversial--get them jobs. But that's not what Tim, Craigie, and Cryn Johannsen want. They want the free lunch. Who are you going to tax now to erase the debt? America is broke. You people make me sick. Instead of addressing the underlying cause of the disease (ridiculous higher ed. costs) you address the symptoms of the disease. Meanwhile, the disease continues to fester and consume more and more of the country's resources. Grow up children.

[Ron Tough]

Bizzaro Watchdog,

You're half right. The issue is the amount of debt - AND jobs. The jobs that Americans are able to don't don't and won't ever pay enough money to service the loans that the borrowers were extended. There's no reason why I or my cohorts, now 7 years out of graduate school, should have ever been able to borrow $185,000 in student loans. That's what my undergrad and law degree cost me: $185,000. My job right now pays $77 (With a vanishing bonus). I should have, as a 22 year old, concerned with cheap beer and a girlfriend, been able to borrow $185,000.

Yes, I'm struggling to pay back my debt. I make $77k a year and I'm one of the lucky ones. Yes there are lawyers who make a lot more but they are the small minority. As far as regular 30 year old lawyers go I'm doing OK.

I drive an old car with nearly 100k miles, I live in a cheap old $900 a month apartment and the wife and I share rent; I don't have any credit card debt, I can't afford to buy a home near my job, I buy food only that's on sale, I send every extra penny I have to my lender and after 7 years I still owe $111,000.

AND I'M ONE OF THE LUCKY ONES.

So Bizarro, the root cause isn't the cost of education, its the unbridled and unconstrained ability to borrow hundreds of thousands of non-dischargable dollars as a 18 year old that is the root cause of the problem.

Limit borrowing, either private or public, to $7,000 a year, and after a couple of years, most colleges will end up costing $7,000 a year, give or take. Amazing that we haven't learned after the subprime foreclosure debacle, that the amount one can borrow (especially with no money down like student loans) is directly proportional to something's costs. Amazing.

[Craigie]

There are a wide variety of legitimate price control measures which I support. For example, why base everything on the general paradigm of cost of attendance minus expected family contribution? With that approach, all that constrains cost is the borrowing limits, and even those didn't do much good when nonfederal loans were easy to get during the credit bubble. Instead, the "cost of attendance" in the formula should be relatively-low, based on reasonable, standard tuition and living expense levels. It could even be indexed to the CPI, but it would still force schools to constrain costs somewhat.

Another example would be to take a page out of the Campus-Based programs and require schools to put in a percentage of the money that is lent out to students and parents. One-ninth is probably too high for DL and Pell, so what about four percent? This also serves as a measure of an institution's administrative capability and commitment to the federal programs. If you won't put any of your own skin in the game, as Morningstar says, then why should America's families put any faith in your school's ability to educate people?

While it may certainly be possible to do some studies proving a connection between borrowing limits and costs of attendance, Pell is another matter. The non-profit private institutions for example will argue to their last breadth that their costs have always been so much more than the maximum Pell Grant that any increases in Pell are too small to drive their costs one iota.

Part of the problem is there is a wide diversity of postsec institutions, and this is seen as a national asset rather than a liability. Thus, under the current situation, it would be difficult not to have different cost of attendance levels, for example, for different types of postsec institutions. Moving appropriate groups of schools back to the Dept. of Labor's funding programs would help but is a political hot potato that will probably never occur. In comparison to other agencies, Education is always weak politically and hence a "soft touch" for compliance, enforcement and oversight. Schools want to benefit from that environment. The typical postsec student today is closer to 30 years old, not 18 or 21. This is part of the age diversity that has emerged. When waited for full-time full-year attendance, you are still around 24.

Due to the root causes of cost expansion that date back before Perkins loans, GSLs and Basic Grants, changes in the structure of the student aid programs are unlikely to solve the problem alone. What really aggravates someone who is paying the full sticker price at State U is to calmly inform them that they are still paying less than the full cost of educating them for a year.