Almost all of highest-risk student loan borrowers are not enrolled in affordable repayment plans
May 16, 2017
• Loan companies are responsible for informing borrowers about affordable repayment options
• “Too many struggling borrowers fall through the cracks in a broken, outdated student loan system”
Nine out of every ten of the highest-risk student loan borrowers are not enrolled in federal affordable repayment plans, according to a report Tuesday from the federal Consumer Financial Protection Bureau.
The analysis looks at hundreds of thousands of the highest-risk borrowers who are exiting default and may be eligible for federal programs that allow them to pay based on how much money they make.
Student loan companies are responsible for informing borrowers about affordable repayment options that can help them stay on track. The Bureau also found that nearly half of the highest-risk borrowers not enrolled in an affordable repayment plan redefault, compared to less than 10 percent of those who are enrolled.
“Too many struggling borrowers fall through the cracks in a broken, outdated student loan system,” says CFPB Director Richard Cordray. “These people did everything that was asked of them to get back on their feet, only to end up deeper in debt. We will continue to work to make sure this industry provides borrowers with the kind of service they deserve.”
CFPB Student Loan Ombudsman Seth Frotman says that for far too many student loan borrowers, the dream of a fresh start turns into a nightmare of default and deeper debt. "When student loan companies know that nearly half of their highest-risk customers will quickly fail, it's time to fix the broken system that makes this possible,” he says.