The United States Department of Education has released a new trove of data that shows the continued growing trend of people who are enrolling the government’s student loan repayment [restructuring] plans; and also that there a lot of other people continuously struggling to pay off the debt.
It seems that there are now more options available for Americans who need to pay off their student loans—thanks, of course, to the Obama Administration expanding such programs which cap payments at a percentage of earnings (income-based repayment)–but not everyone knows of these plans. Direct outreach and improved marketing, however, have helped to quadruple the enrollment in these programs over the past four years.
According to United States Secretary of Education, John B. King, Jr, “Today’s report demonstrates measurable progress in our efforts to help borrowers successfully manage repayment. We want to ensure that those Americans who have devoted a decade of their careers to public service are not burdened by debt while making invaluable professional contributions to their communities.”
The data shows, as of July 1, approximately 5.3 million people were enrolled in such plans, which is a 36 percent increase over the same time period from one year ago. Furthermore, enrollment in the newest plan—the Revised Pay as You Earn (REPAYE)–has tripled over just the last quarter. It is now at 570,000 borrowers. This program limits repayment to no more than 10 percent of the borrower’s monthly income (after graduation) with complete debt forgiveness after 20 years of payment for those who hold debt with a direct federal loan (regardless of income or time of borrowing).
In addition, the United States Department of Education insists that 8.1 million people have not made a single payment on the sum of $128 billion in student loans for the at least nine months (as of this June); which is an 8 percent increase over the same time last year. Furthermore, more than half of the people who are currently in default have loans from the old, bank-based federal loan program; however, the number of borrowers who hold newer loans are quickly falling behind on payments continues to grow, rapidly.
According to CFPB student loan ombudsman, Seth Frotman, “Student loan servicing breakdowns can stack thousands of dollars of hidden costs on the backs of borrowers who can least afford them. Too many student loan borrowers are struggling to take advantage of their right to pay based on how much money they make.”