Half of Rehabilitated Borrowers Will Default Again

October 18, 2016

Nearly half of defaulted student loan borrowers who rehabilitate their loans will default again, said a report released by the Consumer Financial Protection Bureau Monday.

Three-quarters of those who default again will do so within two years of rehabilitating their loan, the report said.

The annual report from the CFPB's student loans ombudsman analyzes complaints made by consumers. The latest report covers complaints from Sept. 1, 2015, to Aug. 31, 2016.

The report finds that challenges setting up an income-driven repayment plan for student loans could push borrowers back into default. More than eight million federal student loan borrowers are in default and 1.2 million went into default in the past year.

Complaints from borrowers to CFPB say customer service issues with student loan servicers create unnecessary challenges for borrowers looking to rehabilitate defaulted loans and enroll in income-driven payment plans.

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