With nearly half of student loan borrowers leaving school owing at least $20,000, more employers are offering student loan repayment benefits to their employees, according to two new CFPB reports. “The Bureau’s research shows that people are taking on more student debt later in life, and having a tougher time paying it back,” said CFPB Director Richard Cordray, as the CFPB offered recommendations to help companies that manage benefits programs ensure that borrowers receive the maximum value. The CFPB has also provided a look at the increasing number, amounts, and delinquency of student loans by older adults (ages 60 and older).
The CFPB Data Point: Student Loan Repayment study found that half of student loan borrowers are older than 34 when they start repayment, 30 percent of borrowers are not paying down their loan balances after five years in repayment, and more than 60 percent of borrowers not reducing their balances are delinquent. Increases in the share of borrowers in delinquency, especially among those with smaller loan amounts, suggest borrowers may not be accessing alternative repayment options—raising questions about the failure to take advantage of debt management options such as income-driven repayment plans.
An accompanying CFPB blog post, too many student loan borrowers struggling, not enough benefiting from affordable repayment options, observed that the benefits of affordable payment options remain largely untapped for borrowers “with lower balances, likely including many who have not completed their degree or certificate.” This finding supports a need for further efforts to provide access to payment relief.
Employer repayment benefits. The report titled Innovation highlights: Emerging student loan repayment assistance programs finds:
- growing number of employers offer repayment assistance to employees with student debt;
- student loan repayment assistance can save some borrowers hundreds or thousands of dollars, but borrowers in default may not have access to benefits offered under a typical employer program;
- servicing problems can create roadblocks to providing and improving student loan repayment benefits; and
- employers and benefits administrators can tailor programs to better meet employees’ needs.
According to the CFPB, “the challenges that consumers, third-party repayment assistance program providers, and program administrators face when initiating, transmitting, and processing third-party payments could reduce benefits intended for borrowers, potentially causing borrowers to miss out on the maximum value of such programs.” The report concludes with a series of recommendations to student loan servicers, policymakers, and administrators of student loan repayment programs to address these concerns.
Older Americans. New data published by the Consumer Financial Protection Bureau demonstrates that older Americans are taking on more student loan debt and are struggling to repay those loans. In January 2017, the Bureau released a snapshot of older Americans and student loan debt, which showed that in the last decade, the number of older student loan borrowers has quadrupled and the amount of debt per older borrower has roughly doubled, as many borrowers take out loans for children or grandchildren. The current report provides additional data on the scope and growth of student debt in each of the 50 states, Puerto Rico, and the District of Columbia.
According to the Bureau, this new data further demonstrates the “significant growth of student debt among the older populations in each state, Puerto Rico, and the District of Columbia, and the proportion of older borrowers struggling to make their payments.” The new state-level data show the changes between 2012 and 2017 in the number of older borrowers, the median amount owed, and the proportion and number of older borrowers in delinquency.
Highlights from the report, older consumers and student loan debt by state, include:
- The number of older borrowers increased by at least 20 percent in every state, including the District of Columbia and Puerto Rico, and the number of older borrowers increased by 46 percent or more in half of all states.
- In more than three-quarters of states, the median student loan balance of older borrowers increased by more than $1,000, and the total outstanding student debt held by borrowers over age 60 increased by more than 50 percent.
- In all but five states, the proportion of older borrowers in delinquency increased.
To the CFPB, this data demonstrates a continued cause for concern as an increasing number of older adults are asked to shoulder student debt. Consumer complaints show that older borrowers who are repaying loans for their own education, co-signing loans for someone else’s education, or borrowing on their children’s behalf, may struggle to repay these loans while living on fixed incomes during retirement.
Resources. A related CFPB blog post, A nationwide look at how student debt impacts older adults, provides resources to help older student loan borrowers navigate problems with their student loans, including the Repay Student Debt tool. This interactive resource offers a step-by-step guide to show borrowers their repayment options, especially when facing default.
