The rate of borrowers who are in default or more than 90 days past due on their student loan debt is approaching 40%, pushing the total amount of student loan debt in the U.S. to $1.4 trillion.
A number of those who have defaulted have legitimate reason. Some were victims taken in by the over-exaggerated promises of for-profit colleges that really just wanted students for the student loans they were taking out that was a vast majority of their revenue. Others never finished college, due to life circumstances or changing events that interrupted their studies.
But another group, termed “strategic defaulters” is emerging. These borrowers are pulled in by the promises from politicians and the possibility of student loan debt forgiveness. Why should they pay their student loans if there is a slight possibility that all remaining student loan debt will one day be wiped away? With these empty promises and no action being taken, it is expected that student loan defaults will continue to rise.
Most recently, education secretary, Betsy DeVos, scrapped an Obama-era plan to streamline the government’s system for servicing student loans. An education budget obtained by the Washington Post revealed a proposal to end a student loan-forgiveness program for public servants, creating uncertainty for some 400,000 borrowers.
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