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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He also has an MBA from the University of South Florida. ...

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Reviewed by Joel Ohman
Founder, CFP® Joel Ohman

UPDATED: Feb 8, 2021

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Unsurprisingly, there’s more bad news about the student debt crisis.

FICO Labs and FICO Survey just released two reports that cast a dark and grim future for all of the borrowers affected by the student debt crisis.

The FICO Labs report highlights how delinquencies show few signs of decreasing. According to the report, the delinquency rate for college loans borrowed between 2005 and 2007 was a lowly 12.4 percent. Unfortunately for students who borrowed from 2010 to 2012, the rate inflated to 15.1 percent.

Hand-in-hand with the delinquency rate increase is the amount of money that students have borrowed.

“The main cause is the ever increasing costs of a college education. In order to cover that higher cost, students are taking out more loans,” Anthony Sprauve, Director of Public Relations for FICO, told

Only a few years ago in 2005 did the average college debt stand at $17,233. That average increased by nearly $10,000 in 2012. Paralleling those broad averages are California’s steep tuition hikes. Another recently published study shows the Golden State’s colleges have risen by 82 percent since 2007.

“This situation is simply unsustainable and we’re already suffering the consequences. When wage growth is slow and jobs are not as plentiful as they once were, it is impossible for individuals to continue taking out ever-larger student loans without greatly increasing the risk of default. There is no way around that harsh reality,” said Dr. Andrew Jennings, FICO’s chief analytics officer and head of FICO Labs, in the FICO Labs report.

Jennings predicts that as more borrowers default, their credit ratings will plummet causing a chain reaction that prevents them from getting future credit that would otherwise fuel economic growth through consumption.

The FICO Survey report echoes these dour sentiments.

According to the report’s findings, almost six in 10 people that were polled expect college loan delinquency rates to increase. If this proves true it will be the fifth consecutive quarter in which most people agreed on a dim outlook for student debt repayment.

“A delinquency is one of the most serious negative impacts on a person’s credit score,” said Sprauve.

In contrast to this, survey respondents agreed that credit card and mortgage debt would slightly begin to improve.

“Our survey results are showing a consistent, cautious optimism around consumer credit each quarter with the big exception being student loans,” said Jennings.