Report: 17% of student loans ‘severely delinquent’
BUSINESS RECORD STAFF Aug 25, 2015 | 3:53 pm
1 min read time
304 wordsAll Latest News, Banking and Finance, EducationNearly 7 million Americans have gone at least a year without making a payment on their federal student loans, a high level of default that suggests a widening swath of households are unable or unwilling to pay back their school debt, The Wall Street Journal reported.
As of July, 6.9 million Americans with student loans hadn’t sent a payment to the government in at least 360 days, quarterly data from the Education Department showed this past week. That was up 6 percent, or 400,000 borrowers, from a year earlier.
That translates to about 17 percent of all borrowers with federal loans being severely delinquent, a share that would be even higher if borrowers currently in school who aren’t yet required to repay were excluded. Millions of other borrowers are months behind but haven’t hit the 360-day threshold that the government defines as a default.
The latest figures highlight how student debt — which has tripled over the past decade to $1.19 trillion, according to the Federal Reserve Bank of New York — has quickly become a crushing burden for more Americans.
“There’s plenty of people out there who feel like they’ve been ripped off, and the notion of repaying the loan for 10 or 15 years is just impossible for them,” said Jason Delisle, a higher education expert at the New America Foundation, a think tank. “If this were happening in the corporate sector, it would be an economic catastrophe if you had defaults of that rate.”
Those in default owe relatively little — a median of $8,900, according to the Education Department. Other figures show that borrowers who attended for-profit schools — who are disproportionately minorities — account for a disproportionate share of defaults. Many borrowers in default dropped out of school, leaving them with debt but not the degree that typically boosts incomes.
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