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CFPB: Most High-Risk Student Loan Borrowers Not Part of Affordable Repayment Plans
On Tuesday, May 16, 2017, the CFPB released a student loan data analysis stating 9 in 10 of highest-risk borrowers were not enrolled in federal affordable repayment plans. Additionally, the study also showed of the 9 in 10 not enrolled, nearly half re-defaulted, compared to less than 10 percent of those who were enrolled.
"For far too many student loan borrowers, the dream of a fresh start turns into a nightmare of default and deeper debt," said CFPB Student Loan Ombudsman Seth Frotman.
The student loan market has grown rapidly in the last decade with about 44 million Americans now owing money. The combined total for outstanding federal and private student loan debt now exceeds $1.4 trillion, with the vast majority from federal loans. The U.S. Department of Education estimates more than 8 million federal student loan borrowers have gone at least 12 months without making a required monthly payment and have fallen into default. Nearly 1.2 million borrowers defaulted in the past year. These borrowers face negative consequences such as wage garnishment, loss of federal benefits, and negative credit history.