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Higher Education
Delinquency: The Untold Story
The number of student loan borrowers having difficulty repaying their loans is significantly higher than generally recognized, and the debate about student debt should be reframed to include the causes and consequences of delinquency, a report from the Institute for Higher Education Policy finds. The report, Delinquency: The Untold Story of Student Loan Borrowing (44 pages, PDF), examined the experiences of borrowers who began repayment between 2004 and 2009 and found that 15 percent defaulted at some point, 26 percent became delinquent but did not default, and 23 percent used deferment or forbearance to postpone their payments. Those who left school without a credential, last borrowed after attending college for a year or less, or attended a for-profit or two-year public institution were at higher risk of becoming delinquent or defaulting. And even when delinquency does not result in default, the authors note, it may affect the borrower's credit scores and ability to borrow in the future. Among other things, the report calls for more proactive debt management strategies, including engaging borrowers early, looking at a borrower's overall financial situation, and providing financial advice through a third party.
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