With the economy very much still in recovery, many individuals are choosing to go back to school, or go to school for the first time, with the intention of gaining an esteemed and high paying job upon graduation. However, as the unemployment rate continues to remain high, many recent graduates are finding themselves with high levels of debt and not enough opportunities to repay their loans. Now, 17 percent of all student loan borrowers are 90 days delinquent on their loans.
While this is a scary statistic for both borrowers and lenders, an article in the Atlantic proves that there are many factors to consider when looking at the delinquency rate.
"One of the nuances that often gets lost in discussions about student debt is that the biggest borrowers aren't necessarily the riskiest borrowers," the article wrote. "There are many people who take out modest loans but have trouble paying them back, either because they fail to graduate or because their degree doesn't open many doors in the job market."
Many states that have high rates of student loan delinquencies, the article showed, don't necessarily have a high debt. West Virginia and Mississippi have some of the lowest level of borrowers in the country, yet the highest delinquency rates, likely due to high unemployment rates.
For lenders, this means it is necessary to be looking at information other than just the amount of debt a borrower is taking on. A borrower's likelihood to stay in school and find a job after college or graduating school may be what is more important. With risk assessment software, any lender can use the most information about a borrower to make an accurate decision about loans and keep delinquency rates from increasing.