Monday, June 09, 2014

Don't Know Much about Student Loans

In a first, the Federal Reserve Bank of New York asked Americans how much they know about the onerous rules and regulations involving federal student loans. According to the Fed survey, they don't know much.
  • Only 28 percent of the public knows the federal government can report delinquent student debtors to credit agencies and garnish wages, tax refunds, and even Social Security payments until debt (plus interest) is repaid. 
  • Only 37 percent of the public knows that federal student debt is "extremely unlikely" to be forgiven in bankruptcy.
  • Among those with student loans, fewer than 50 percent are aware of these facts.
  • Parents whose children have student loans are no more knowledgeable than the general public about the rules and regulations regarding their children's debt.
"Overall, our analysis reveals that U.S. households have a poor understanding of the implications of being delinquent on student loans," conclude the researchers.

Source: Federal Reserve Bank of New York, Liberty Street Economics, What Americans (Don't) Know about Student Loan Collections

1 comment:

Darragh McCurragh said...

The tragedy of this "Sell Services" and "start a business" motto is that with increasing student debt, default will also inevitably increase. Now what did a senior student or a graduate without a job (or in need of a second job) often do in the past? Sell insurance. Turns out you can't get a broker's license if you defaulted on your student loans. This is a vicious circle that applies to other higher-than-non-qualified jobs too!