A recent press release from the US Department of Education (DoE) shows that the number of student loan defaults have increased despite the fact that loan delinquencies have actually declined.
At the beginning of 2016, more than 30 million people owed approximately $855 billion in direct student loans, not counting those loans made through the FFEL program, which is now discontinued. This represents about a 15 percent increase from a year ago, most likely due to the increase in tuition.
However, the DoE reported that almost half of all borrowers (46 percent) were currently not paying on their student loans. This figure does not include those who are still currently taking courses or who are in the six-month grace period that follows graduation. Despite what appears to be an alarming number of borrowers who are not making payments, the number of those who are (54 percent) is actually up from the first quarter of 2015, when only 51 percent of all borrowers were making on-time payments.
Out of this 46 percent, 13 percent of borrowers have been granted a deferment, while 14 percent have received a forbearance due to economic hardship.
The other 18 percent are currently either delinquent or in default. Ten percent of these borrowers are behind in their payments by at least 30 days, while the others have outright defaulted on their student loans. Unfortunately, the amount of student loans in default has grown by 31 percent, leaving taxpayers with a potential bill of $56 billion.
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