Student Loans Rising Faster Than Most Expected
March, 17, 2017: According to the Washington Post article Student Loan Defaults Are Rising Faster than you Think – “a new analysis of federal student loans reveals that the number of people severely behind on repaying their debt has soared in the past year, painting a bleak picture of one of the largest government programs.
The Consumer Federation of America (CFA) released a study Tuesday that found that millions of people had not made a payment on $137 billion in federal student loans for at least nine months in 2016, a 14 percent increase in defaults from a year earlier. The consumer watchdog used the latest data from the Education Department, which manages $1.3 trillion in federal student debt owed by 42.4 million Americans.
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On Monday, Sen. Elizabeth Warren (D-Mass.) and Rep. Suzanne Bonamici (D-Ore.) sent a letter asking the Education Department to stop imposing double-digit collection fees on people who default on FFEL loans. Those borrowers can be charged up to 16 percent of the principal and accrued interest owed on the loans, unless they enter the government’s loan rehabilitation program within 60 days of default. Yet companies overseeing the collection of that debt are imposing the fee regardless, lawmakers say.”
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For many, this sudden shift threatens to push them into default, leading to wage garnishments, seized tax refunds, and damaged credit scores.
