With more student loan borrowers taking advantage of government assistance programs, many would assume that the number of individuals defaulting on their loans would be in decline. Data released by the Department of Education shows that more people than ever are taking part in these programs. Those most in need of assistance, though, are still not taking advantage of these options. Instead, they are defaulting on their loans.
While the income-based repayment programs and other forgiveness programs are helping borrowers, information from the Education Department shows that they are used mainly by graduate students and individuals who are not in danger of defaulting. Those who could most use help may not be aware of these options or, in some cases, may already be in default and uncertain how to get out of it.
The number of borrowers on income-based repayment plans increased by 36 percent this year, as did the number of borrowers in default. That number now stands at 20.6% of those who have federal student loans. The average borrower in default has less than $10,000 in student loan debt. Some even have as little as $5,000. These borrowers often did not finish their degrees and are now left with debt and with nothing to show for it.
Those who finished their degrees may have over $50,000 in student loan debt, but they make up the bulk of those who are on income-based repayment plans.
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