Seven million student loan recipients are in default, and few are taking advantage of government programs to make payments easier by tying them to income.
WASHINGTON — As Congress was debating a fix to doubling student loan rates last month, the Consumer Financial Protection Bureau announced that existing federal student loans had passed a staggering milestone: More than $1 trillion in outstanding debt. And a new CFPB report shows that much of that debt isn't being repaid.
Fewer than half of direct federal loan recipients are in repayment, along with 60 percent of private, bank-administered Federal Family Educational Loans. Seven million borrowers are in default on a federal or private student loan, according to the report.
And not many borrowers are taking advantage of government programs to reduce the payment burden by tying monthly payments to discretionary income, despite a recent push by the Obama administration to expand and promote those programs.
"Only about 10 percent of borrowers are enrolled in any kind of income-based repayment program. The others are in either standard 10-year repayment programs or in extended programs, which stretch loan payments — and interest — out over many more years but don’t take borrowers' financial situations into account," Politico reports.
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