More Than One Million People Now Defaulting on Students Loans Each Year
“For many, the payments are proving unmanageable.”
This number is going up and is expected to hit 40 percent of borrowers by 2023.
CNBC reports:
More than 1 million people default on their student loans each year
More than 1 million student loan borrowers each year go into default.
Outstanding education debt in the U.S. has tripled over the last decade and now exceeds $1.5 trillion, posing a greater burden to Americans than auto or credit card debt.
For many, the payments are proving unmanageable. By 2023, nearly 40 percent of borrowers are expected to default on their student loans. That’s when a person has not made a payment toward their education debt in roughly a year, triggering it being sent to a third-party collection agency.
What kind of student loan borrowers are at risk of defaulting? And what’s the financial impact on them of doing so?
A new report from the Urban Institute, a progressive think tank in Washington, D.C., answers these questions. The researchers analyzed the fates of borrowers who entered repayment in 2012.
Who is defaulting on their student loans?
Federal loans come with a lot of protections that should make default rare, said Kristin Blagg, a research associate at the Urban Institute, focusing on education.
However, she learned, that is not the case: Within four years after leaving school, nearly a quarter of the borrowers had defaulted. “To default is still pretty common,” Blagg said.
She added, “I found that these are borrowers who tend to be in financial distress.”
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Comments
I know there are also parent loans being defaulted on however if our kids were given a decent interest rate and the parents loans would be paid off. My interest rate has been at the lowest 7 percent have been paying for over 12 years and that 10 year rule is bull. Big business wants degrees but not willing to pay for them so every one is trying to make money off of these grads so of course default is high as I am getting to retirement I can’t keep paying $1000 a month and all most all of it is in interest w. Have written senators congress etc but interest rates have not changed I have paid my debt all in interest.
One of the reasons you can’t get a decent interest rate is the default rate. It’s a death spiral.
She added, “I found that these are borrowers who tend to be in financial distress.”
Wow, is that profound. No wonder these people can’t run a loan program.