A report released by the Consumer Financial Protection Bureau (CFPB) has uncovered alarming news about student loans. The report details multiple changes in student loan repayment trends that have occurred over the last decade. These changes include:
- A two-fold increase in the number of borrowers leaving school with $20,000 or more in student loans. In addition, the percentage of borrowers leaving school with $50,000 or more in student loans has tripled.
- More borrowers are taking on student loan debt at older ages. The CFPB report found that 50 percent of student loan borrowers are 34 years or older when they begin repayment. This number was 25 percent in 2003. In addition, the number of borrowers who entered repayment before turning 25 years old decreased from 30 percent in 2003 to 15 percent in 2016.
- Thirty percent of borrowers are failing to pay down their balances after five years of repayment. This number was 16 percent in 2008.
- Sixty percent of borrowers are not reducing their principal balances or are delinquent.
Which Student Loan Repayment Options Can Help Borrowers?
According to the CFPB, employers are stepping up to the plate by helping employees with student loans pay off their higher education debt. In fact, almost 10 percent of employers with over 40,000 employees have created student loan repayment assistance programs. These assistance programs may save employees thousands of dollars in interest payments.
The CFPB’s report also shows that many borrowers remain unaware of helpful income-driven repayment programs for federal student loans. These programs cap monthly payments to a percentage of your income. After making 20 to 25 years of payments, the remaining balance is forgiven.
For more information on helpful repayment programs, we encourage you to read Primerus Paradigm article written by student loan attorneys Neil S. Sader and Michael J. Wambolt.