There are some other notable data points from the Education Department release. Graduation rates, at 60 percent, have plenty of room for improvement. A strong predictor of student loan delinquency (or default) is whether the student has actually graduated from college, since students who drop out face limited employment prospects. This far outpaced the 20 percent increase in the outstanding balance for all borrowers not in school or a grace period.Įxtreme nonperformance of student loans is growing troublingly common. Most notably, student loans in default (defined here as loans more than 360 days delinquent) increased 31 percent in the past year, to $56 billion. While delinquency rates dropped, overall loan nonperformance increased. Unfortunately, the trend seems to be moving in the wrong direction. Moreover, high delinquency and default rates will hurt the ability of students to gain access to credit in the future, slowing the economy. Now, these statistics do not mean that taxpayers will need to pick up the tab for 46 percent of the outstanding student loan balance, but they do raise a red flag that taxpayers could be on the hook for a lot of money if these loans are not repaid in full. Another 14 percent are in forbearance, meaning the borrower has encountered economic hardship and had their payments suspended or reduced.įifty-four percent of loans are currently in repayment, up slightly from 51 percent at the same point in 2015. Another 13 percent are in deferment, which means payments have been postponed for various reasons. Ten percent of student loans are delinquent, meaning the borrower has missed payments for thirty days or more. (This total does not include loans still outstanding under the now-discontinued FFEL program, which guaranteed private-sector student loans.) The total direct loan amount outstanding is up roughly 15 percent over a year ago, doubtlessly the result of relentless tuition increases.Įxcluding student loans owed by borrowers currently in school or in their six-month grace period, 46 percent of student loans are not currently being repaid. The total amount of outstanding direct student loans stood at $855 billion at the beginning of the first quarter of 2016, distributed among over 30 million recipients. The increase in defaults is worrisome and needs to be addressed by Congress. However, their press release - and much of the accompanying media coverage - instead played up a decline in loan delinquencies. Help for borrowers currently in Default.The US Department of Education's new data on the status of outstanding student loans show that outright defaults are up.Providing debt awareness for all student loan borrowers:.If you had a Federal Perkins Loan, you must notify the Office of the Bursar at Lincoln University of your address change or other inquiries. You must repay your student loans, even if you don't graduate, can't find a job after graduation, or aren't satisfied with your education. You must notify your servicer if you change your address, telephone number, or name. ![]()
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