More and more borrows are falling behind on their student loan debt. The Consumer Watch Group, The Consumer Financial Protection Bureau is pushing for ways to make student loan repayments more affordable for borrowers of private loans-especially those that are encountering financial hardships. The group’s position is that students with private loans face bigger challenges that those with other type loans, because they typically don’t have flexible repayment options like those with Federal student loans. The group is pushing for flexible repayment options like “income based repayment where borrowers make payments based on their income rather than the amount they owe. The current situation with borrowers of private debt fall into hardship varies by the lender. Typically they tend to be far fewer and more limited than those with Federal debt.
The bureau is currently working on a plan that that will let private borrowers to refinance their loans. This strategy would allow students to take advantage of lower market rates, which would lower monthly payments to the lenders.
This new initiative comes at a time when more and more students are taking on debt, with a large number of them falling behind on their payments. Students that graduate with a Bachelor’s Degree have left school with an average of $28,700.00 in debt. This figure is a 31 percent increase over five years ago. Further, 11 percent of all loans are 90 days in arrears in the third quarter which is an increase from 8.8 percent from last year.
In contrast the Federal Government loans offers payment plans that help borrowers lower their monthly payments by extending the repayment period of the loan or starting out the payments gradually, beginning with lower payments up front and increasing them later. They also allow qualifying borrowers to repay their loans based on salary rather than their debt load.
Private lenders should follow the Feds example and allow for easier repayment options
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Author of the books: It Starts With an Idea – Tax Tips for Small Businesses, The Ultimate Real Estate Investor Tax Guide, The Complete Guide to the New Tax Law – American Taxpayer Relief Act of 2012, Everything You Wanted to Know about the IRS – Audits, Appeals and Collections, Tax Avoidance is Legal! The Complete Guide to Individual Income Tax, The Complete Guide to the Affordable Care Act’s Tax Provisions, The Complete Guide to Retirement Plans for Small Businesses, The Complete Guide to Estate, Gift and Trust Taxation, The Complete Guide to Hiring an Accountant, The Complete Guide to Subchapter S-Corporations,, and Free Money. All available exclusively on Kindle