Student loan defaults increased significantly between 2015 and 2016.
According to data from the Department of Education, student loan defaults increased at least 17% between 2015 and 2016. And in terms of real consumers, with real loans, that represents an additional 600,000 borrowers that defaulted on their student loans.
Significant increase in number of student loan defaults
In 2015, approximately 3.6 million borrowers were in default on their student loans. At the end of 2016, that number had risen to approximately 4.2 million borrowers.
According to the data, 1.1 million borrowers either defaulted, or defaulted again on their student loans.
The reasons for increased defaults are unclear
There are more options for student loans than ever before. From income-based repayment options, to public service loan forgiveness, to deferment and forbearance options.
That said, there also appears to be a recent surge in government action against companies that service student loans, and collect on student loans in default.
For example, GC Services was sued for improper student loan collections. The company allegedly continued to collect from the wrong people, and also revealed debts in voicemails to the wrong people.
And Navient was sued for how it serviced student loans. Specifically, Navient allegedly failed to steer borrowers towards the best repayment plan options, and allegedly failed to provide disclosures about certain renewal deadlines for some repayment options.
Good information can be hard to obtain
In my practice, I have seen a surge in borrowers that are misled by private companies that allegedly offer to help borrowers get out of default. Some companies charge a fee to help borrowers get enrolled in the “Obama loan forgiveness program.” That program doesn’t exist.
In all likelihood, it references one of the many income-based-repayment plans that was enacted during the Obama administration. Those plans, however, are administered by the federal government. And while the paperwork may not always be easy, it is designed to allow all borrowers to enroll on their own. In other words, consumers don’t need to pay a third party to get access to these benefits–they already have access to them.
If your loans are in default, contact an attorney
I have no doubt there are some private companies that provide good advice to student loan borrowers. I also have no doubt that it is impossible to distinguish the good companies from the bad ones. And I also tend to think there are way more bad companies that good ones.
If you have questions about defaulted student loans, you can contact an attorney, like me, that specializes in student loan issues. I have seen just about every scenario that you can imagine. I also sue companies that misrepresent borrowers rights, and I regularly defend student borrowers in student loan lawsuits.
I live in the world of defaulted student loans. And I can help. Feel free to contact me today to see how I can help you.