High Balance Student Loan Borrowers Skirt Default, Still Struggle

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Study Loan
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High Balance Study Loan Borrowers Skirt Default,
Still Struggle
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• Its true that borrowers with less student debt
  actually default in higher numbers. Borrowers who
  drop out of college rack up less debt because
  theyre not in school for as long.
• Without a degree or certificate, these borrowers
  are less likely to earn the income needed to
  retire the debt and, therefore, are at a higher
  risk for default.
• The Federal Reserve numbers show that more than
  30 percent of borrowers who left school in 2009
  owing less than 5,000 in student loans
  experienced a default.
• On the other hand, that same study shows only
  about 15 to 20 percent of the high-balance
  borrowers of the 2009 cohort have defaulted.

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• In fact, according to the Federal Reserve,
  "borrowers who start out owing more than 50,000
  are at risk for bad outcomes almost to the same
  extent as small-balance borrowers owing less than
  5,000."
• Thats because default, which doesnt officially
  occur for federal student loans until 270 days of
  nonpayment, isnt the only bad outcome.

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• Thats not always a worst-case scenario for the
  borrower.
• More and more high-balance borrowers are
  beginning to take advantage of income-based
  repayment programs that require only small
  payments tied to income and forgive any
  outstanding balance after 10, 20 or 25 years.
• Taking advantage of income-based repayment plans
  can help borrowers more effectively balance
  education debt payments with other financial
  priorities.
• Its definitely better than letting student loans
  slip into delinquency and default. But it can
  also mean holding an increasing load of debt on
  your credit record, which could diminish your
  chances of securing other types of credit.

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• The use of deferments and forbearances to
  postpone payment of a federal student
• Deferments and forbearances can be lifelines to
  borrowers facing imminent the process whereby
  accrued interest is added to the principal
  balance and interest is then charged on the new
  larger balance.

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• According to the New York Federal Reserve, nearly
  10 years out of college the 2005 cohort of study
  loan borrowers has paid down only 38 percent of
  its original student debt.
• Those are numbers that could impact us all if
  they stunt our economic recovery.
• Source (http//bit.ly/1keq4W1)

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