43% of Students Aren’t Making Payments Toward Student Loans

Expert says government does not impose credit checks on borrowers

college students
AP

Forty-three percent of students are not making payments toward their student loans, raising concerns that millions of them may never repay, the Wall Street Journal reported.

According to data from the Education Department, there are 22 million Americans with federal student loans and 43 percent of them are behind on payments toward the more than $200 billion that is owed.

"About 1 in 6 borrowers, or 3.6 million, were in default on $56 billion in student debt, meaning they had gone at least a year without making a payment," states WSJ. "Three million more owing roughly $66 billion were at least a month behind."

There are another three million borrowers who are in "forbearance" or "deferment" which means they are in a financial emergency such as unemployment and can temporarily stop making payments.

"Carlo Salerno, an economist who studies higher education and has consulted for the private student-lending industry, noted that the government imposes virtually no credit checks on borrowers, requires no cosigners and doesn’t screen people for their preparedness for college-level course work," the article states.

"On what planet does a financing vehicle with those kinds of terms and those kinds of performance metrics make sense," Salerno said.

According to research from Navient, some students are prioritizing other bills and not paying back student loans when they can. "A borrower who fails to pay down an auto loan might have her car repossessed; with student loans, there is no such threat," the article explains.