On student loan delinquencies, Minnesota looks good

The economy’s been lousy for four years and the level of student debt topped $1 trillion last year. It’s a combination that, nationally, has turned many young Americans into student loan delinquents.

If there’s good news here, it’s that Minnesota institutions are showing the lowest levels of student loan delinquencies, The Federal Reserve Bank of Kansas City writes:

Minnesota has the lowest delinquency rate at 5.1 percent in the first quarter of 2012, while Oklahoma has the highest rate at 18.5 percent. Half of states have rates below 10 percent. A number of factors explain differences in student loan delinquency rates across states. Among these are the relative performance of the state economy and student loan debt levels.

Two charts from the Federal Reserve Bank of Kansas City tell the story. The first shows Minnesota in the middle of the pack on average student loan debt per borrower at its institutions.

avedeby.JPG

The second shows Minnesota institutions with the lowest student loan delinquency rate

delinq.JPG

Federal Reserve Bank of Kansas City

According to the federal Education Department, a debt is considered delinquent when payment is past due 30 to 270 days. After that, it’s considered in default.

Despite the data, high fives are not in order. As we’ve reported before, when you dig down into the data you find that much of the crippling student debt problem is focused on public community colleges and for-profit career schools.

The state Office of Higher Education data show those institutions generated more than 80 percent of the delinquencies but represented only about 40 percent of the Minnesota college enrollment in 2008.

As we talk more about student loans, delinquencies, job prospects and whether college is worth the money, we should probably narrow the conversation. Should we refocus this discussion on the schools with where the debt and delinquency problems are the worst?

– Paul Tosto