WASHINGTON – Deanne Loonin, an advocate for low-income student loan borrowers and an attorney with the Harvard Law School Project on Predatory Student Lending, has a suggestion for the U.S. Congress in response to the federal student loan debt crisis.
“Discharge it” – all federal loans, not just those in default – in a comprehensive cancellation process “and start all over again” with a system that works better for students and the government, she said during an event Thursday at the American Enterprise Institute (AEI), where two research reports were unveiled that examined the national default crisis.
Sequential panel discussions featuring policy experts delved into key findings of “Underwater on Student Debt: Understanding Consumer Credit and Student Loan Default” by Kristin Blagg of the Urban Institute and “Federal Student Loan Defaults: What Happens After Borrowers Default and Why” by Jason D. Delisle, Preston Cooper and Cody Christensen of AEI.
Student loan debt has eclipsed credit card debt as the biggest form of debt among American citizens, and federal loans make up about 90 percent of student debt. The total amount of student loan debt has risen steadily for years, and now more than 8 million student borrowers are in default on their federal student loans – about one in every five borrowers whose loans have come due.
Every quarter, according to the Urban Institute study, about 250,000 borrowers of federal direct loans default, with another 20,000 to 30,000 who had been in default and come out, defaulting again.
Yet, as panel participants told nearly 50 guests, little is known about why borrowers default.
More is known about who is likely to default: low-income students and students of color.
