%1

The total debt shouldered by Americans has hit another record high, rising to $13.5 trillion in the last quarter, as student-loan delinquencies jumped, Reuters reported. Flows of student debt into serious delinquency - of 90 or more days - rose to 9.1 percent in the third quarter from 8.6 percent in the previous quarter, the Federal Reserve Bank of New York reported on Friday. That propelled the biggest jump in the overall U.S. delinquency rate in seven years. Total household debt, driven by a $9.1 trillion in mortgages, is now $837 billion higher than its previous peak in 2008, just as the last recession took hold and brought on massive deleveraging across the United States. Indebtedness has risen steadily for more than four years and sits more than 21 percent above a trough in 2013. The $219 billion rise in total debt in the quarter ended September 30 was the biggest jump since 2016.

A new study found that student loans, despite their toxic reputation, helped recipients earn better grades, take more classes and graduate sooner, the Wall Street Journal reported. The study counters a drumbeat of bad news about student debt, which has nearly tripled in the last decade and been blamed for everything from hindering homeownership to damping the willingness to switch jobs or go to graduate school. The five-year research project, which followed 20,000 students at an urban community college, found that taking out loans averaging $4,000 enabled the students to work less and study more while also providing a cushion against emergencies. Student loans don’t need to be paid back while students are still in school. “I think having these resources provides a buffer against unexpected issues,” said Benjamin Marx, an economist of University of Illinois and co-author of the study, to be published today in Education Next, a journal of opinion and research put out by the Harvard University Kennedy School of Government. Marx and his colleague tracked 10,000 students who had been offered student loans via a letter from the school and 10,000 who hadn’t. Students who got offers in their letters were 40 percent more likely to take a loan. Those additional students who got loans earned 3.7 more credits per academic year than they would have if they didn’t take a loan.

A government program meant to forgive the federal loans of cheated students has all but stopped functioning, the New York Times reported. No Education Department employees are devoted full time to investigating borrowers’ complaints. Instead, the agency’s staff has fought in court to reduce the amount of relief granted to some students and to halt a rule change intended to speed other claims along. That has left more than 100,000 claims for relief in limbo, according to the Education Department’s most recent data. The relief program, called borrower defense, became a popular way for students to seek debt forgiveness after several major for-profit schools went bust in recent years. During the Obama administration, the Education Department approved about 30,000 claims, more than half of them in the final two weeks before the new administration took over. All of those borrowers had their loans fully forgiven. But President Trump’s education secretary, Betsy DeVos, who before taking office invested in companies with ties to for-profit colleges and student-loan debt collectors, has derided the program as a “free money” giveaway and vowed to make changes. She has also appointed a former dean of DeVry University — a for-profit school that is the subject of some 10,000 fraud claims by former students — to oversee the unit that runs the program. As of mid-2018, her department had approved only 16,000 claims, and Education Department officials confirmed that about 15,000 of those were granted partial forgiveness. Tens of thousands more still await a decision.

The Federal Reserve reported yesterday that consumer borrowing rose by a seasonally adjusted $10.9 billion following a jump of $22.9 billion in August, the Associated Press reported. The August gain had been the strongest increase in nine months. The September advance was below economists' expectations for a $16.5 billion gain. The category that covers auto loans and student loans increased $11.2 billion. The category for credit cards fell by $311.6 million after having risen $4.6 billion in August.