Student Loans are overwhelming America. Is Betsy DeVos Ready?
Written by Terry Lawson in Debt Rookie Blog
I have been practicing student loan law for several years now. Just when I think student loans aren’t going to get worse, more depressing news appears. Recently, there have been a flurry of articles pointing out growing disasters in the student loan landscape. From the business-friendly Wall Street Journal to the public voice of NPR, outlets across the political spectrum paint a stark picture of the student loan landscape.
Student Loans aren’t being repaid – but it’s worse than we thought
For example, the Wall Street Journal reported more than half of the former students at over 1,000 schools (which is over a quarter of all such schools) that used federal student loans are failing to pay them back. Meaning, these borrowers are either in default, or have never paid even $1 on their loans in the last seven years. In other words, the loans aren’t getting paid back, at all. This is a problem that goes way, way beyond suspect trade schools and for-profit colleges, the usual suspects in federal student loan abuses.
Older borrowers are struggling more with student loans than most realize
NPR’s report analyzed recent CFPB findings that people over 60 have added student loan debt in the last decade at an alarming rate. The average total debt for older borrowers doubled from 2005 to 2015. And worse, 37% of borrowers who are 65 and over have defaulted on their loans. Most older borrowers rely on Social Security payments as a primary income. Federal student loan defaults hit them especially hard. Why? Because the government can offset Social Security payments to pay off defaulted federal student loans.
Anyone paying attention can see that a huge crisis is looming in the very near future. Problems with federal student loans are clearly picking up steam. And what is the primary administrative agency for the federal student loan programs? Naturally, it’s the Department of Education. The nominee for the Secretary of Education should be someone who is ready to tackle these challenges from day one. Because the next leader of the Department of Education, whoever it is, will have a trillion dollar bomb to defuse.