Those who have been following our year-long series exposing the student debt bubble are by now well aware that this latest $1 trillion+ reincarnation of subprime will have a very unhappy ending. Which is why today's release of the quarterly Fed report on household debt and credit will hold few surprises for them. There is however, one data point which is notable: as of December 31, 2012, the soaring delinquency rate on student loans (first reported here, and subsequently confirmed by the Fed itself), has surpassed that of credit card debt.





Which makes perfect sense: because as consumers are still aggressively deleveraging their revolving balances, they are simply replacing them with far cheaper, Federally-funded credit in the form of non-revolving student debt, which as all know, is used for most other purposes but paying down study-related expenses. And why not: since the government is providing a cheap credit subsidy to the big banks, why should consumers not find the cheapest cost of funding. That everyone else will have to pay for this blow up when it ineivtably does happen, as every credit bubble always ends, is a different story.

And as a tangent, these three charts should effectively explain why the "Housing recovery", i.e., the second housing bubble is in full force in California and Nevada.

The epic California debt balance per capita:

And the rebound in Nevada, already highest, delinquency rate.

Source: NY Fed