Someone defaults every 29 seconds.
Many student loan borrowers face even tougher financial challenges than their counterparts a few years ago, a new federal report says.
Nearly half of the borrowers who leave school owe at least $20,000, nearly double the amount owed by similar borrowers a decade ago, according to the analysis issued Wednesday by the Consumer Financial Protection Bureau.
Today’s borrowers are also older than their counterparts years ago, and fewer of them are able to pay down their debts within five years, the study found.
Noting that some employers now offer repayment benefits as a perk to recruit and keep workers, the consumer agency offered recommendations to improve those efforts.
“The Bureau’s research shows that people are taking on more student debt later in life, and having a tougher time paying it back,” said Richard Cordray, the consumer agency’s director. “Our recommendations are aimed at helping employers ensure these innovative programs deliver their intended benefits.”
More than 44 million Americans collectively owe more than $1.4 trillion in student loan debts used to help pay for college, trade school and graduate education, Federal Reserve data show. Driven by soaring costs for higher education, increasing student debt loads have made it more difficult for borrowers to repay, buy homes, start families and pursue ventures that would help the U.S. economy grow.
Against that backdrop, the consumer bureau analyzed de-identified credit records of more than 1 million student loan borrowers who first started repaying their debts between 2002 and 2014. The analysis found that:
- Borrowers with $20,000 or more in student loan debt represented roughly 20% of all borrowers in the group that started making repayments 15 years ago. Now, they make up nearly half of all borrowers beginning repayment.
- Those between ages 25 and 34 at the start of their last student loan repayment period account for the largest share of borrowers making repayments. However, the share of borrowers younger than 25 fell from about 30% in the 2002 group to less than 15% in the 2014 group. The share of borrowers 35 or over nearly doubled during the same period.
- Five years after they started repayment, 23% of borrowers with loans lower than $20,000 weren’t making payments high enough to reduce the amount owed. More than half of borrowers in this group were delinquent or in default on their loans.
The consumer bureau said student loan borrowers who get repayment assistance from employers or other outside parties would benefit from an easily accessible process that enables for benefactors to direct electronic payments for the loans.
Follow USA TODAY reporter Kevin McCoy on Twitter: @kmccoynyc
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