Federal Student Loan Debt Exceeds $1T; $103 Billion in Default

Public Service Loan Forgiveness program up six fold in two years

AP

Federal student loan debt now exceeds $1 trillion, and $103 billion of that is in default, according to a Government Accountability Office (GAO) report.

"As of September 2014, about one in seven student loan borrowers (14 percent) had defaulted on their loans within 3 years of beginning repayment, and approximately $103 billion of more than $1 trillion in student loan debt was in default according to data from Education," states the report.

The report evaluated programs that help borrowers repay loans, and the level of participation in those programs. One of those programs rewards students who choose a job in government.

The Public Service Loan Forgiveness (PSLF) program, which was established in 2007, will forgive the remaining balance of a student loan as long as the borrower completes 10 years in public service employment and makes 120 payments while employed by the government or a nonprofit organization.

Participation in this program has grown six-fold in less than two years. By the end of 2012, there were 23,952 borrowers who had employment and loans certified for this program. The latest data found that as of September 2014, there were 146,866 borrowers certified—showing a six-fold increase in less than two years.

And the report finds that the Department of Education is encouraging more to sign up and receive these benefits. "Officials from Education’s loan servicer for PSLF told us they encourage borrowers who had employment and loans certified for PSLF to enroll in repayment plans that are more likely to enable them to benefit from forgiveness," states the report.

"Let’s tell another one million students that when they graduate, the will be required to pay only 10 percent of their income on student loans, and all of their debt will be forgiven after 20 years—and forgiven after 10 years if they choose a career in public service, because in the United States of America, no one should go broke because they chose to go to college," President Obama said in 2010.