Students borrowers much likelier to default then before

About one-third of all student-loan debt belongs to so-called subprime borrowers, and a growing number of these risky loans aren't being paid on time, a new report said.

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% were considered delinquent, a rise from 24% five years prior, according to the report from TransUnion LLC, released Wednesday.

The dollar amount of student loans outstanding rose 75% 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% to around $24,000.

More than 12% 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% one year earlier. A single borrower can have multiple student loans show up on their credit report.

The report also broke out data specific to private student loans, which have come under fire recently. Just over 5% of private student loans were delinquent, significantly lower than the federal rate.

But both delinquency rates were higher than those on other kinds of debt, including mortgages.

- online.wsj.com