Department Of Education Lets Borrowers Default On Student Loans, Ignoring Helpful Alternatives

Career College Central summary:

  • Companies working for the Department of Education over the past year have allowed hundreds of thousands of borrowers to default on their federal student loans rather than enrolling them in the Obama administration’s debt-relief programs, new data reveal.
  • About as many student loan borrowers defaulted on their federal debts as were aided by the administration’s three main initiatives meant to avert defaults, according to the Education Department figures.
  • Some 600,000 borrowers who took on debt from the government’s Direct Loan program to pay for college entered default in the 12 months ending in June, according to Education Department data. Over the same period, about 620,000 borrowers with loans from that program took advantage of the debt-relief initiatives.
  • That breaks out to 630,000 borrowers enrolling in Income-Based Repayment, which launched in 2009; 50,000 borrowers falling out of Income-Contingent Repayment, a less charitable initiative that began in 1994; and 40,000 borrowers joining Pay As You Earn, which is the most generous of the three programs and launched last December.

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