The percentage of student loan borrowers leaving school with at least $20,000 in student debt has doubled from 20 percent to 40 percent from a decade ago, according to data released by the Consumer Financial Protection Bureau today. The percentage of borrowers owing $50,000 or more tripled in that time — rising from 5 percent to 16 percent.
The study also found that an increasing number of borrowers are unable to cover the interest on their loans when making their monthly payments. Today, 30 percent of borrowers have not paid down their balances after five years in repayment, compared with 16 percent in 2008. Of those, more than 60 percent are delinquent. The number of borrowers who reported repaying their loans in full after five years fell from 50 percent to 41 percent, while 12 percent of borrowers’ saw their debt grow in the first five years of repayment, up from 8 percent in 2008.
As student debt burden continues to increase for both young people and their parents, the American Bankers Association is leading the way in encouraging banks to offer student loan repayment plans as an employee benefit through its endorsed provider, Gradifi. The CFPB study noted the advantages of such repayment plans—for example, “with a 10-year, $30,000 loan at 6 percent interest, an employer paying $100 a month will save the borrower more than $11,000 over the life of the loan,” the CFPB said.