With the total amount of student debt exceeding $1 trillion, organizations and government agencies, both in Washington and around the country are taking notice and explore options for reducing the burden of student debt on the millions of borrowers.
The Consumer Financial Protection Bureau (CFPB) announced today that they are requesting information about possible solutions that would allow private student loan borrowers to better manage education debt repayment.
“Taking out a loan is no longer the exception, it’s the norm,” Rohit Chopra, CFPB Student Loan Ombudsman, said in a press call today, addressing the rising amount of student loans.
Chopra said that the CFPB’s request for information will help to develop a plan to “stem the tide of student loan distress, delinquency, and default.” While the CFPB is zeroed in on two main options—income-based repayment options and refinancing—they highlighted the need to learn more from the request about other possibilities.
Recently, Campus Progress launched #ItsOurInterest, a campaign that seeks to begin a conversation about ways to deal with student loan debt with a special focus on student loan refinancing.
The burden of student debt faced by millions of borrowers are accompanied by serious consequences for both individuals and the economy. An increasing number of people are defaulting on their student loans—over 13 percent of students whose loans were due in 2009 defaulted on that debt within three years. Even for those who are able to make payments, student debt “dampen[s] consumption,” as people then have less disposable income.
Chopra was clear in his warning that rising student debt was a plague on the economy. To anyone who thinks that there is not a problem, he said, “You are missing the warning signs.”
He emphasized that the impact of student debt extends beyond just the borrowers, referring to an idea known as the student debt domino effect. When students have high amounts of loans, then they are less likely to participate in the economy, which involves activities such as buying a house or a car.
A Pew Report released today found that the percentage of young people who own a home decreased from 40 percent in 2007 to 34 percent in 2011. Similar trends are seen in car ownership, and Chopra stressed that in some small towns, “A car is literally a vehicle to economic participation.”
The CFPB is seeking comments on their Notice and Request for Information from a variety of sources, including financial institutions, institutions of higher learning, finance experts, and students. Comments are being accepted until April 8, 2013.
To learn more about Campus Progress's campaign to tackle educational debt, visit www.itsourinterest.org or join the conversation on Twitter with the hash tag, #ItsOurInterest. Or, use the form below to share your story with us!