Federal Student Loan Repayments Are Troublingly Low

Photo (cc) by DonkeyHotey

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.

Check out “Ask Stacy: What Can I Do About My Student Loan Debt?

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.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
The Worst Nursing Homes in America Are Revealed
The Worst Nursing Homes in America Are Revealed

The nursing homes with a history of providing subpar care previously hadn’t been identified for a government list.

10 Ways Retailers Trick You Into Spending More
10 Ways Retailers Trick You Into Spending More

Think you’re a savvy shopper? Find out how retailers persuade you to dig more deeply into your wallet.

12 Ways to Never Pay Full Price for Anything
12 Ways to Never Pay Full Price for Anything

Stop paying retail prices. Here are plenty of ways around that.

8 Products to Reduce Anxiety and Stress
8 Products to Reduce Anxiety and Stress

Current events have you feeling anxious? These Amazon products can take the edge off.

3 Big Medicare Costs Just Got Bigger
3 Big Medicare Costs Just Got Bigger

Some Medicare premiums and deductibles for 2020 will take a bigger bite out of Social Security payments.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
9 Things You’ll Never See at Costco Again
9 Things You’ll Never See at Costco Again

The warehouse store offers an enormous selection, but these products aren’t coming back.

11 Things Retirees Should Always Buy at Costco
11 Things Retirees Should Always Buy at Costco

This leader in bulk shopping is a great place to find discounts in the fixed-income years.

Over 50? The CDC Says You Need These 4 Vaccines
Over 50? The CDC Says You Need These 4 Vaccines

Fall is the time to schedule vaccines that can keep you healthy — and even save your life.

Why Cloth Masks May Increase Your Coronavirus Risk
Why Cloth Masks May Increase Your Coronavirus Risk

A new study finds that wearing a cloth mask can backfire if you don’t clean it properly.

11 Household Items That Go Bad — or Become Dangerous
11 Household Items That Go Bad — or Become Dangerous

When you get the impulse to stockpile these everyday items, pay close attention to their expiration dates.

8 Things You Can Get for Free at Pharmacies
8 Things You Can Get for Free at Pharmacies

In this age of higher-priced drugs and complex health care systems, a trip to the pharmacy can spark worry. Freebies sure do help.

7 Ways to Boost Your Credit Score Fast
7 Ways to Boost Your Credit Score Fast

Your financial security might soon depend upon the strength of your credit score.

The 15 Worst States for Retirees in 2020
The 15 Worst States for Retirees in 2020

Based on dozens of metrics tied to affordability, quality of life and health care, these are not ideal places to spend retirement.

These Are the 4 Best Medicare Advantage Plans for 2020
These Are the 4 Best Medicare Advantage Plans for 2020

Medicare Advantage customers themselves rate these plans highest.

The 10 Most Commonly Stolen Vehicles in America
The 10 Most Commonly Stolen Vehicles in America

A new model parks atop the list of vehicles that thieves love to pilfer.

This Is the Cheapest Place to Buy a Used Car
This Is the Cheapest Place to Buy a Used Car

Looking for a good deal on a set of wheels? This should be your first stop.

19 High-Paying Jobs You Can Get With a 2-Year Degree
19 High-Paying Jobs You Can Get With a 2-Year Degree

These jobs pay more than the typical job in the U.S. — and no bachelor’s degree is required.

5 Ways to Get Amazon Prime for Free
5 Ways to Get Amazon Prime for Free

Hesitant to drop $119 a year on an Amazon Prime membership? Here’s how to get it for free.

5 Keys to Making Your Car Last for 200,000 Miles
5 Keys to Making Your Car Last for 200,000 Miles

Pushing your car to 200,000 miles — and beyond — can save you piles of cash. Here’s how to get there.

26 States That Do Not Tax Social Security Income
26 States That Do Not Tax Social Security Income

These states won’t tax any of your Social Security income — and in some cases, other types of retirement income.

3 Ways to Get Microsoft Office for Free
3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

10 Reasons Why You Should Actually Retire at 62
10 Reasons Why You Should Actually Retire at 62

If you can, here are several good reasons to retire earlier than we’re told to.

7 Surprising Features That Boost Your Home Value
7 Surprising Features That Boost Your Home Value

You can add value to your home without hiring a contractor to do expensive renovations.

5 Things That Make Life More Meaningful for Retirees
5 Things That Make Life More Meaningful for Retirees

Retirees agree: These are the things that give them purpose and fulfillment in their golden years.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.