The fear is that growing debt from student loans — as well as auto loans<br />and credit cards — could put many Americans back in a hole, triggering a new wave of defaults, much like what happened in the mortgage meltdown a decade ago.<br />Auto loans totaled about $1.1 trillion, or 9 percent, of all household debt in the first quarter, up from 6 percent in the third quarter of 2008.<br />About one in 10 student borrowers is behind on the loans — the highest delinquency rate<br />of any type of loan tracked by the New York Fed’s quarterly household debt report.<br />Student loans account for 10.6 percent of that total, up from 3.3 percent in 2003,<br />while housing’s share, though still great, has fallen back to 2003 levels.<br />The Federal Reserve Bank of New York said Wednesday<br />that total household debt had reached a new peak — $12.7 trillion — in the first three months of the year, another milestone in the long, slow recovery of the United States economy.<br />But in reality, families are using debt as a mechanism to pay for things their incomes don’t support.”<br />Student loan debt, driven by soaring tuition costs, now makes up 11 percent of total household debt, up from 5 percent in the third quarter of 2008.<br />One of the big drivers of the latest debt binge has been student loans, whose mounting burden can<br />prevent Americans from buying homes or spending on big-ticket items, stifling economic growth.<br />Defaults have been creeping up in auto loans — one of the few sectors in which lenders were willing<br />to extend credit to subprime borrowers on the financial margins after the 2008 crisis
