New Federal Data Show College Student Debt Worse than Previously Believed!

Dear Commons Community,

New figures, released by the U.S. Education Department last week, indicate that roughly 33 percent of borrowers were late on one of their federal student loans as of Dec. 31. Previous measures had put the delinquency rate much lower at about 20 percent, masking the true amount of distress among borrowers trying to make good on their taxpayer-backed debts.

Some 41 million Americans collectively carry more than $1.1 trillion in education loans owned or guaranteed by the U.S. Education Department, a total that surpasses every form of consumer credit in the U.S. except home mortgages. The figures reflect more than two-thirds of the $1.1 trillion total. The remainder is owned by the private sector as part of a bank-based federal loan program that has since been discontinued.

The new measure of borrower distress comes as the White House urges the Education Department to improve its management of the growing federal student loan program and to give borrowers more protections against unmanageable debt loads.

As reported in The Huffington Post:

“We know that the rising cost of higher education and growing levels of student debt hit home for millions of Americans,” said Denise Horn, an Education Department spokeswoman. She added that the department enables borrowers to keep current on their loans by making payments based on their earnings, and said it is also trying to keep costs low for future borrowers by rating schools and helping students evaluate college costs before they enroll.

But the data released Thursday suggest that those efforts aren’t having much effect on former students struggling to manage their federal debt burdens.

“Anyone looking at these numbers would have to say that the needs of borrowers aren’t being met,” said Chris Hicks, who leads the Debt-Free Future campaign at the advocacy group Jobs With Justice.”

It is a travesty that in one generation, our country has completely altered the nature of higher education funding by transferring the costs of obtaining a collegeĀ degree squarely on the backs of students and their parents. The states share much of the blame for this situation after decades of squeezing funding for their public colleges and universities. The federal government is also to blame for the ineptitude of the Department of Education personnel in managing its loan programs.




Comments are closed.