The Federal Reserve Bank of New York released a report showing that not only is student loan debt at $1.17 billion, but also that 11.3% of all borrowers are in default (over 270 days past due). But that’s not the real measure of just how many student loan borrowers are backed up on their obligations.
As of the fourth quarter of 2014, 11 percent of all borrowers were in default, with an additional 7 percent of borrowers having defaulted in the past. Another 6 percent of borrowers were in earlier stages of delinquency, but not yet defaulted; fully 37 percent of borrowers had at least one missed payment on their credit report.
The borrowers with highest default rates, at nearly 34 percent, are among the borrowers who owe less than $5,000. The default rate among the borrowers who leave school with more than $100,000 in debt is almost 50 percent lower, at 18 percent.
All of that could be overlooked to some extent if people were paying down their student loan debt, right? There again, the news is grim. In fact, fewer than 4-in-10 borrowers are currently paying down their student loan balances. Everyone else is either in default, severely past due, or treading water by way of one of the many federal repayment options designed to keep people in repayment.
Here are the links to the three-part series by the New York Fed:
- The Student Loan Landscape
- Looking at Student Loan Defaults through a Larger Window
- Payback Time? Measuring Progress on Student Debt Repayment
Trends In Lending
It’s been said that you are the average of your five friends. Taking that addage to the world of credit and lending, British lenders are using data gleaned from your social media connections to help decide whether you’re a good credit risk. Time to ditch those stoner friends you knew in high school or you may find yourself without student loan options.
Student Loan Activism
Fifteen former students of failed for-profit school Everest College calling themselves the Corinthian Fifteen have decided that they will no longer pay their federal student loans because their education sucked. Not so smart given the fact that the federal government can collect from you until you meet your maker. Seems it would be a smarter move to just look into income-based repayment and chalk it up as a bad decision.
On a more positive note, Strike Debt has announced that it has absolved 9,438 people of debt, totaling $13,384,642.14, from the scandal-racked Corinthian Colleges Inc. — once one of the country’s largest for-profit education providers. The group took a similar action in September, clearing nearly $4 million of privately held debt from Everest Colleges, part of the Corinthian system.
P.G. Sitenfield, Cincinnati City Councilman running to represent Ohio in the U.S. Senate in 2016, is making student loan debt one of the cornerstones of his campaign. His “Everyone Deserves a Shot” Initiative, announced recently, takes aim at federal student loans by proposing that student loan interest rates be lowered by as much as 71%. In addition, the proposal would encourage low-income students to seek a four-year degree by providing one year of federal loan forgiveness upon completion of their degree, encouraging and rewarding graduation.
From The Halls Of Higher Education
Joseph Bekken, financial aid director at North Idaho College, allegedly solicited students for sex in exchange for scholarship money. Authorities claim that Bekken placed an ad on Craigslist in the Casual Encounters section directed to women, men or couples; after being contacted by an officer posing as a student, Bekken sent an email saying, “I have some grant money that I can get applied to your account. I just look for some fun in return.” You can check out the article, but don’t blame us if you’re too grossed out to see straight for hours afterwards.
For those looking for a more legitimate means of financing a college education, US News and World Reports tells us that graduates of St. Francis University in Pennsylvania exit with the largest student debt balance – 87.7% of grads took out student loans, and the average debt load was a whopping $50,275. In contrast, the college where students graduated with the least amount of debt – an average of $5,096 – was Princeton University where only 24% of students borrowed at all. I guess the smart and the wealthy are one and the same.
Want a laugh at the expense of lawyers? Blake D. Morant, dean of the George Washington University Law School and president of the Association of American Law Schools, tells The Chronicle of Higher Education with a straight face that now’s a terrific time to go to law school. This, in spite of the fact that enrollment is down at top law schools across the country because there’s a glut of lawyers who can’t find jobs. He talks about the recent scandal involving his school taking transfer students who wouldn’t otherwise be qualified for admission on the basis of their LSAT scores, and tells us that those students are making the decision not necessarily because Georgetown is a good school. Just one more reason for you to hate lawyers.