[CLBS] Student loan default rates are increasing

Fri Sep 29 10:52:48 MDT 2017

Good morning,

Below is a short article regarding Student debt defaults.  Not a big surprise to our group, but this issue is creeping more and more into mainstream news outlets.  I hope it starts resonating with lawmakers to allow more liberal discharge of the loans through bankruptcy.

I will still be paying my student loans when my kids (now 5 and 7) reach college age.

More People Than Ever Are Defaulting On Their Student Loans
by Britni Danielle<https://education.good.is/contributors/britni-danielle>
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 September 29, 2017 at 7:25
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As the cost of higher education skyrockets, student loan debt has become an unavoidable rite of passage for most college students. Collectively, Americans owe a whopping $1.45 trillion<https://studentloanhero.com/student-loan-debt-statistics/> in student loan debt, which outpaces credit card debt by upward of $600 billion<https://studentloanhero.com/average-credit-card-household-debt-statistics/>. While many people consider money taken out to obtain a degree to be “good debt<https://www.lendkey.com/blog/student-loans-considered-good-debt/>,” new numbers from the Department of Education (DOE) show an alarming number of Americans just can’t afford it.

After declining for four years in a row, the number of people who have defaulted on their student loans has risen to 11.5%<https://www.ed.gov/news/press-releases/us-department-education-releases-national-student-loan-fy-2014-cohort-default-rate>. Though that number is still lower than it was five years ago when the default rate was 14.7% — thanks to the Obama administration’s aggressive push to offer options like income-based loan payments and its commitment to go after for-profit institutions that saddled students with mountains of debt — the uptick in defaults is not a good sign for the economy. Now, a record 8.5 million<http://www.cleveland.com/metro/index.ssf/2017/09/a_record_85_million_have_defau.html>Americans are in default on their loans, and that number just keeps growing.
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581,000 student loan borrowers who entered repayment in 2014 are now in default. How they break down by institution type:
12:40 PM - Sep 27, 2017<https://twitter.com/PrestonCooper93/status/913111099012255744>
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Along with the updated numbers, the DOE also listed 10 colleges<https://www.ed.gov/news/press-releases/us-department-education-releases-national-student-loan-fy-2014-cohort-default-rate> whose student loan default rate is over 30%, which could result in a loss of access to federal financial aid funds. Proponents of stricter protections for students argue the DOE’s recent rollback of Obama-era rules<https://www.nytimes.com/2017/06/14/business/student-loans-for-profit-schools-colleges.html> aimed at protecting students from predatory for-profit colleges will only lead to even more student defaulting on their loans.
27 Sep<https://twitter.com/nasfaa/status/913145483798949888>
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. at usedgov<https://twitter.com/usedgov> today publicly released the 2014 3-year student loan cohort default rate, which increased slightly from 11.3 % to 11.5% #fachat<https://twitter.com/hashtag/fachat?src=hash>
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This year, 10 institutions may lose Title IV eligibility for high default rates. #fachat<https://twitter.com/hashtag/fachat?src=hash> pic.twitter.com/pRlIZkBFqJ<https://t.co/pRlIZkBFqJ>
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“Now is the time to be improving student loan policies and increasing oversight and accountability,” said Pauline Abernathy<https://ticas.org/sites/default/files/pub_files/cdr_nr_sept_27.pdf>, executive vice president of the The Institute for College Access and Success. “But the Department is doing the opposite. The Department’s rollback of critical protections and enforcement will only lead to more student loan defaults, higher debt burdens, and wasted taxpayer dollars.”

Patrick J. Geile
Foley Freeman PLLC
953 S. Industry Way, Meridian, Idaho 83642
P.O. Box 10
Meridian, Idaho 83642
Direct line: (208) 947-1563
Phone:  (208) 888-9111
Fax:  (208) 888-5130

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