Brooklyn Consumer Federation
Largest Student Loan Servicer, Navient, Lags in Affordable Repayment Plan Sign-Ups Washington, D.C. – Analysis of new data released by the U.S. Department of Education reveals millions of Americans are in default on Federal Direct Loans serviced by companies hired by the federal government. “3,000 preventable student loan defaults each day in America is 3,000 too many.” said Rohit Chopra, Senior Fellow at the Consumer Federation of America and formerly the Consumer Financial Protection Bureau’s Student Loan Ombudsman. “Our broken system works well for the student loan industry, but is failing borrowers, taxpayers, and our economy.” As of the end of 2016, 42.4 million Americans owed $1.3 trillion in federal student loans. These figures exclude borrowing through private student loans, credit cards, and home equity loans to finance the growing costs of college. The Federal Reserve System puts total outstanding student loans at $1.4 trillion, which includes federal and private loans, but excludes other loans used to finance higher education. Student loan servicers, the companies paid to collect payments, are responsible for enrolling borrowers in repayment plans to help them avoid default. For example, the Pay As You Earn (PAYE) and Revised Pay As You Earn (REPAYE) plans help to cap payments at roughly 10% of income, alleviating the burden of student debt. Highlights of the Consumer Federation of America’s initial analysis of the recently-released Education Department data, as of December 31, 2016, include:
AES/PHEAA had the highest levels of enrollment, though this is likely attributable to its status as the exclusive servicer for Public Service Loan Forgiveness. Borrowers generally benefit from this program only if they enroll in an affordable repayment plan. The full set of data is available on the Department of Education’s website in the Federal Student Aid Data Center. Borrowers struggling with student loans should visit the Consumer Financial Protection Bureau’s Repay Student Debt tool, available here. Contact: Rohit Chopra, 202-939-1018 (Original Source Linked Below):
http://consumerfed.org/press_release/new-data-1-1-million-federal-student-loan-defaults-2016/
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