Good News On Student Loans

Some students actually pay them back.

At the American Enterprise Institute (AEI), Jason D. Delisle, Preston Cooper, and Cody Christensen found that:

•”Observers often think of student loan default as a terminal status. But 70 percent of borrowers bring their federal loans back into good standing within five years after default.”

•Five years after defaulting, 30 percent of borrowers fully pay off their loans. Others bring their loans into good standing through resolution processes, but typically do not make progress paying down their loans even several years later.”

Nevertheless, the AEI researchers also learned that:

•”Within five years after exiting default, 30 percent of borrowers take out more student loans, and another 25 percent default again on new or existing loans;” and

•”Defaulters who pay down their loans can incur large fees, but fees are largely waived for those who complete resolution processes even if they do not pay down their balances afterward.”

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