Figure translates into about 17% of all borrowers being severely delinquent
Nearly 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.
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%, or 400,000 borrowers, from a year earlier.
That translates into about 17% 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.
Severe delinquencies are rising despite the sharp drop in unemployment over the past year and a big push by the Obama administration to enroll borrowers in programs that lower their monthly payments. Delinquencies on other types of debt such as credit cards and mortgages have fallen. And shorter-term defaults on student loans have declined over the past year.
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.
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... “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.” ...Read the full story HERE.
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