and is an enormous economic challenge for
the millennials, or whatever name that
generation is using.
The Consumer Finance Protection Bureau notes that more student loan borrowers are using income repayment plans for government student loans.
Many borrowers have found help through income-driven repayment plans, where your payment is capped as a portion of your income. In the past year, more than one million student loan borrowers signed up for income-driven repayment plans on their Federal Direct student loans – an increase of 64 percent.
But those programs are NOT available for private student loans.
The government has “urged them to develop more options to help borrowers avoid default and increase the likelihood of full repayment.”
Well, judging by the folks who contact me, the private student loan lenders have not come up with anything new. Or affordable.
They are talking the same talk the mortgage lenders did to head off bankruptcy law reform that would have allowed consumers to keep their homes by paying the home value, instead of the much higher mortgage balance.
In addition, several industry players have shared with us that they are willing to make deals with borrowers and will be launching new programs. But even today, many borrowers still have questions about these new repayment plans: What are the options? How do I enroll? Will other lenders offer similar repayment options?
The inquiry we are launching today can help us get to the bottom of these questions. Here’s an example of the information request that we’re issuing.
It is possible that the private student loan lenders will come up with something, but, count me among the skeptics.
If you went to one of the Corinthian Colleges, you are in luck, as the government crushed them by effectively disqualifying their students from getting student loans:
Today, the Consumer Financial Protection Bureau (CFPB) and the U.S. Department of Education announced more than $480 million in forgiveness for borrowers who took out Corinthian College’s high-cost private student loans. ECMC Group, the new owner of a number of Corinthian schools, will not operate a private student loan program for seven years and agreed to a series of new consumer protections.
Contact me if you have student loan issues.