Thanks to so many of you for responding to the new polling feature on our home page. Your responses reveal some interesting and often surprising results.
In the first poll from this summer, we asked if you were having trouble with just federal student loans, just private loans, or both. About one-third of the approximately 300 borrowers responding said that they were struggling with both federal and private loans. “Just federal loans” came in second, followed not too far behind by “just private loans.” Only a small percentage of respondents stated that they didn’t know what type of loan they had.
We would like to hear from all of you, but particularly those of you struggling with both federal and private loans. For example, we want to know when you took out these private loans. The private student loan market is not nearly as big as it was during the subprime credit heyday, but as this poll shows, there are still many borrowers (and co-signers) getting these loans and struggling to repay. On the other hand, if you are struggling with federal loans, have you looked into some of the flexible repayment options?
In our second poll, we asked if those having trouble repaying student loans had completed their educations. About three-quarters of almost 250 respondents said that they had completed their education, but were still struggling to repay loans. We have previously written about how little research there is on why borrowers default. However, the research that does exist consistently points to lack of completion as the major risk factor for default. These results show a more complicated picture. Most important, it is troubling to see how many borrowers that have completed their educations are also struggling. On this same theme, in response to our third poll, about three-quarters of just over 250 respondents said that they were working full-time, but having trouble repaying student loans. We know that borrowers with lower incomes and unemployed borrowers are often in severe financial distress, but it is sobering to see how many full-time workers are also having trouble repaying student loans.
Among other issues to consider, these results show how difficult it is to rely on college completion or even full employment to resolve student loan debt problems. The results also highlight the disconnect between federal loan relief options such as unemployment deferments and income-based repayment and consumers. We know from our experience representing low-income borrowers that very few know about these options. It’s important for the government to do more outreach (once the government is open again) but this is not enough. Many borrowers do not enroll in these programs because servicers and collectors give them inaccurate information or simply fail to tell them about the range of options. Others enroll in programs like IBR, but lose the benefits somewhere along the way.
An important first step is to ensure that servicers sand collectors know what they’re doing, that the government engages in rigorous oversight, and that monetary incentives align with borrower interests. To that end, we are asking in our fourth poll if you know who your servicer is? So far, most of you have said that you do. That’s great news. We hope you will review the information on our web site and on the Department’s web site and communicate with your servicer to make sure that they are following the law and helping you stay out of financial distress.
