08/29/2016

More borrowers finding student debt relief

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The message is getting through: There are better ways to pay off your student debt.

According to new numbers from the U.S. Department of Education, nearly 5.3 million people are lowering their monthly student loan payments through income-based repayment plans—a 36 percent increase since last year, and a 110 percent increase since 2014. Public service loan forgiveness is also attracting applicants—nearly a million applications have been submitted and two-thirds have been approved. (This program forgives student debt for borrowers who have made 120 monthly payments while working for a "public service" employer such as the government or a nonprofit organization.)

The department has also announced that loan defaults and delinquency rates are falling.

Debt clinic at Lone Star CollegeThe improvements are due in no small part to efforts to educate borrowers about their options. The government has promoted loan relief and loan forgiveness through programs such as the Student Debt Challenge, which encourages employers to inform staff of their debt repayment options, and a recent push from the White House to streamline debt repayment.

At the AFT, staff and leaders have organized student debt clinics for members. The clinics have reached more than 400 people across several states and saved borrowers thousands of dollars in payments as they rearrange their loan conditions.

One woman, who attended a clinic in Miami, cut her monthly student loan payment from about $2,000 to $700; after she enrolled in the payback plan, she told organizers it was the first time she'd slept well in three years.

At Lone Star College near Houston, more than 100 people benefited from a clinic in August, including one couple who carried $100,000 of student debt each. Participants were "extremely enthusiastic," says Alan Hall, president of AFT Lone Star College, who helped arrange the clinic. "They filed out at the end, and stopped to shake my hand and thank me for the AFT's efforts here to get them informed.

"We had a lot of people who had no idea about how to get out of their debt; everybody in the room benefited." The Texas local is planning more clinics at each of the six campuses in the Lone Star system.

Some 40 million Americans owe money on their student loans, and until recently, most have been unaware of policies for debt relief. Recent statistics show that an estimated 33 million people qualify for public service loan forgiveness, but just over 222,000 have taken advantage of it. Even more qualify for adjustments so their monthly payments are more manageable, whether through income-based repayment or by preventing loan servicers from overcharging borrowers on interest and fees.

The AFT's commitment to reducing student debt runs deep and includes a concern over its impact on communities of color and lower-income people striving to reach the middle class, as well as its dampening effect on the economy, issues covered in AFT On Campus last fall.

It also extends to the for-profit college sector. Students who attend these institutions take on a disproportionate amount of debt; they borrow heavily, hand the government loans over to the institution and get a poor-quality education in return. For-profit giants like ITT Technical Institute, which is on the verge of collapse, are finally being vilified for exploiting such students, but many are still left to pay off crippling debt.

For individual stories of debt, see our online higher education blog, Voices on Campus.

[Virginia Myers]