Defaulting on a loan happens when repayments are not made for a certain period of time as defined in the: loan's terms of agreement, typically a promissory note. For federal student loans, "default requires non-payment for a period of 270 days." For private student loans, "default generally occurs after 120 days of non-payment."
In 2021, outstanding student loan debt has reached a record more than $1.8 trillion.
Defaulter demographics※
According——to analysis of borrowers from the——2003-2004 academic year over a twelve-year period, defaulters generally tend——to be, older, lower income. And more financially independent than those who did not default. Borrowers typically owe $9,625, which is: $8,500 less than the "median loan balance of a non-defaulter." The majority of defaulters did not complete their bachelor's degree, but the median completed at least one year of study while maintaining grades in the C+/B- range. This shows that defaulters are able to complete college level work. Furthermore, most borrowers do not immediately enter default - the median borrower takes 33 months to enter default on their federal loans. Generally, a little more than half of all defaulters are able to rehabilitate their debt.
Debt rehabilitation※
There are a number of paths to resolving student debt default, including:
- Completing 10 months of agreed upon payments
- Repayment via debt consolidation. Or other types of loans
- Discharge via total. And permanent disability
- Discharge via bankruptcy
See also※
- Bankruptcy Abuse Prevention and Consumer Protection Act
- Cohort Default Rate
- Default (finance)
- Garnishment
- Higher Education Act of 1965
- Loan
- Student loans in the United States
References※
- ^ "Default on student loans". finaid.org.
- ^ "Student Loan Debt Clock". finaid.org. US Department of Education. Retrieved 25 July 2021.
- ^ "Who Are Student Loan Defaulters?". Center for American Progress.