Americans increased their borrowing in the final three months of 2014 and, in a troubling sign, are wrestling more with student and auto loans, according to a study released Tuesday by the Federal Reserve Bank of New York.

Student loan data shows delinquencies rose in the October-December period. A total of 11.3% of student loans were delinquent in the quarter, up from 11.1% in the July-September period. The nation’s student loan balance climbed by $31 billion last in the fourth quarter to $1.16 trillion, making it the largest source of debt after mortgages, which gained $39 billion to $8.2 trillion in the fourth quarter. Overall delinquency rates — loans that are 90 days or more past due — were unchanged at 4.3%. Delinquent mortgage and credit card debt fell, but auto loan delinquencies rose to 3.5% from 3.1%. The biggest trouble spot - not surprisingly - remained student loans.

By contrast, only 3.1% of mortgage loans were delinquent, though that level is far higher than before the Great Recession, when mortgage delinquencies were consistently around 1% to 1.5%.

Student loan balances have jumped over the past decade. In the first quarter of 2005, outstanding student debt stood at $363 billion, about a third of the current level, based on a 2013 New York Fed report.

Student debt delinquency levels actually have come down since 2013, when the rate reached 11.8%, but remain elevated from an estimated 6% a decade ago, according to the Fed. Student loans are the type of debt most likely to be past-due, having surpassed credit card delinquency rates in 2012.

Delinquency rates for student loans possibly understate the actual problem, according to the Fed report. About half of the student loans are in deferment, in grace periods or in forbearance, temporarily removing them from the repayment cycle.

Student loans can't be discharged in bankruptcy and, as a result, linger on borrowers' credit reports, creating rising pools of delinquent debt. But the New York Fed said the survey also reflected “high inflows” of new delinquency. 

Bank officials said both the high amount of student debt and borrowers' increasing difficulty in repaying it were having affecting borrowers' ability to buy houses or move out on their own.

“Although we’ve seen an overall improvement in delinquency rates since the Great Recession, the increasing trend in student loan balances and delinquencies is concerning,” said Donghoon Lee, a research officer at the bank. “Student loan delinquencies and repayment problems appear to be reducing borrowers’ ability to form their own households.”



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