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Student Loans: The Problem

Student loan debt has topped $1 trillion in recent years, making it the largest type of consumer debt outstanding other than mortgages. The average student loan borrower graduates with nearly $30,000 in debt.

The CFPB estimates that over 1-in-4 borrowers are delinquent or have defaulted on their student loan debt.

One predictor of borrower distress is whether the student attended a for-profit college. While only small minority of students enroll at a for-profit, these schools generate the largest share of defaults on federal student loans. In addition, investigations of large for-profit college chains such as ITT and Corinthian have revealed that private student loan programs offered at these schools have default rates of over 60%.

African Americans and Latinos disproportionately enroll at for-profit colleges, and have higher debt levels and lower completion rates than their counterparts attending public or private, non-profit schools, placing them at particular risk.

Income-based repayment programs are designed to help struggling borrowers by providing more affordable federal student loan payments. However, many student loan servicers have failed to enroll borrowers that could clearly benefit into these programs, leading them to defaults that could have been prevented by better servicing.

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Policy Counsel
Executive Vice President