A record one-quarter of $450 billion of student loans are being repaid on income-based repayment plans, DBRS
Banking And Finance,Poverty,Student Loan Debt,Higher Education,Wealth,Education
Unemployment hasn’t been this low for 50 years, but a record one-quarter of student loans from a popular federal program qualified for easier repayment plans to help borrowers avoid default, according to DBRS Morningstar.
Income-based repayment plans were being used on 24.7% of $452 billion worth of student loans with U.S. government backing during the fourth-quarter of 2019, up from 21.8% a year earlier, DBRS Morningstar said in a Friday report.
The Obama administration bolstered income-based repayment options in 2009 for student borrowers in the Federal Family Educational Loan Program (FFELP) following the global financial crisis, which saw credit dry up and millions of American lose their homes to foreclosure.
The government started offering FFELP loans in 1965 to help families finance education (and creditors to support the program), by offering a near 99% backstop on all principal and interest due on loans made under the program. Obama ended FFELP in 2010, essentially cutting out private lenders.
