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CFPB: 9 of 10 Highest-Risk Student Loan Borrowers Not Enrolled in Affordable Repayment Plans
Wednesday, May 17, 2017 6:15 AM

Nearly Half of the Highest-Risk Borrowers Not Enrolled in an Affordable Repayment Plan Re-default

Tuesday the Consumer Financial Protection Bureau released an analysis of a student loan industry data sample showing that 9 in 10 of the highest-risk borrowers were not enrolled in federal affordable repayment plans.

The analysis looks at hundreds of thousands of the highest-risk borrowers who are exiting default and may be eligible for federal programs that allow them to pay based on how much money they make. Student loan companies are responsible for informing borrowers about affordable repayment options that can help them stay on track. The Bureau also found that nearly half of the highest-risk borrowers not enrolled in an affordable repayment plan re-default, compared to less than 10 percent of those who are enrolled.

View CFPB’s new report on Student Loan Re-defaults

Tuesday's report provides the public with data related to the performance of certain previously defaulted student loan borrowers. Key results for borrowers in the Bureau’s sample include:

  • 9 out of 10 of the highest-risk borrowers were not enrolled in an affordable repayment plan after rehabilitation.
  • Nearly half of the highest-risk borrowers re-default if not enrolled in an affordable repayment plan.
  • 95 percent of the highest-risk borrowers do not re-default within the first year when they consolidate into an affordable repayment plan.

This data offers new evidence that borrowers, taxpayers, and student loan companies would benefit from a clearer, more streamlined process to help previously defaulted borrowers succeed over the long term, and to ensure borrowers avoid default in the first place. Last year, the Bureau warned that hundreds of thousands of struggling student loan borrowers may end up back in default over the next two years, racking up at least $125 million in unnecessary interest charges along the way.