If you have defaulted on your federal student loan — you are not alone. According to a September 2017 article in the Washington Post, “the share of people not making payments on their federal student loans within three years of leaving college has risen, reversing five years of reported declines in new defaults.”
The shift is subtle — up to 11.5 percent from 11.3 percent from 2015 to 2016 — but the raw numbers show what a significant issue this is. Of the more than 5 million people who began repaying their student loans in October 2013, 580,671 defaulted.
In addition to posing problems for borrowers, the article notes that loan defaults have consequences for colleges, as the U.S. Department of Education can impose sanctions on schools with default rates above 30 percent for three years in a row, or 40 percent for a single year. This year, 10 colleges — mostly cosmetology and barber schools — hit those thresholds, so their students won’t be able to take out federal loans or receive federal grants unless they win an appeal to the department.
Also noted is the fact that while the default rate at public colleges held steady at 11.3 percent, the rates at private non-profit colleges and for-profit colleges edged up, from 7 to 7.4 percent and 15 to 15.5 percent, respectively. And, a more comprehensive look at the government’s portfolio shows millions of people hadn’t made a payment on approximately $144 billion in federal student loans for at least nine months as of June — a 12 percent increase in defaults from the previous year.
Are you ready to investigate your options with respect to your student loan debt? Call us, the San Diego Student Loan Lawyer, at (619) 295-3322 for a free initial consultation.