Nearly one-third of student loan borrowers with old federally guaranteed loans are either in default or behind on their payments -- yet few are using income-based repayment programs, according to a new report by the Consumer Financial Protection Bureau.
The CFPB said on Wednesday that at least 30 percent of borrowers, or roughly five million people, who have loans under the now defunct Federal Family Education Loan Program are delinquent in repaying their debt or have already defaulted.
That program, under which the federal government guaranteed loans made by private lenders, was ended in 2010. But borrowers with such loans still comprise almost a third of all student loan borrowers, federal data shows.
“Today’s report found that federal student loans made by private lenders may have a greater rate of borrowers in default and delinquency than the broader student loan market,” wrote Seth Frotman, the bureau’s acting student loan ombudsman. “This raises concerns about whether distressed borrowers with these loans are getting adequate information on repayment options from their servicers.”
Based on a sample of borrowers with privately held, federally backed loans, the CFPB estimated that 95 percent of borrowers were not enrolled in the income-driven repayment plans available to them.
The new numbers were part of the bureau’s annual student loan report, which also documented a 23 percent increase in the number of borrowers making complaints about all types of student loans, both federal and private.
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