Nearly half of borrowers are delinquent, despite the rollout of programs designed to ease their debt burden.
Roughly 43 percent of student borrowers are not making payments on the more than $200 billion they owe in federal student loans.
It’s an alarming figure that’s raising concerns that millions of those delinquent borrowers will never repay what they owe, according to The Wall Street Journal.
The new figures represent the fallout of a decade-long borrowing boom as record numbers of students enrolled in trade schools, universities and graduate schools.
While most have since left school and joined the workforce, 43 percent of the roughly 22 million Americans with federal student loans weren’t making payments as of Jan. 1.
Student loan debt surpassed $1.2 trillion in 2015.
According to the Journal, this is the breakdown of the Education Department’s student loan portfolio:
- Current on loan: 12.5 million borrowers
- In default (one year without making a payment): 3.6 million borrowers
- Delinquent (at least a month behind): 3 million borrowers
- In postponement: 3 million borrowers
The student loan nonpayment rate a year ago was 46 percent, compared with 43 percent now, Money reports. Though that slight improvement in the payment rate may look promising, Money notes that the dip is mainly due to more borrowers joining payment plan programs for distressed borrowers, which allows them to pay a smaller percentage of their income on their loan.
Money said enrollment in income-based repayment programs hit 4.6 million in the past year, a 48 percent increase.
Still, some members of Congress and the Consumer Financial Protection Bureau blame loan servicers for not doing enough to talk struggling borrowers into signing up for the income-based payback programs that often let them slash their monthly loan bills.
“The servicers aren’t quite promoting them in the way they should be — I think some of it’s information failure,” Rachel Goodman, a staff attorney at the American Civil Liberties Union, told the Journal.
But Navient Corp., one of the companies hired by the government to collect debt, said it reaches out to borrowers between 230 and 300 times before they default. Navient’s research suggests that student loan borrowers prioritize other bills, such as car loans, mortgages and heating bills, over student loan payments, the Journal reported.
Click here if you need help dealing with your student loan debt.
Do you have student loan debt? What do you think of student borrowers’ student loan default rate? Share your comments below or on our Facebook page.