Published December 2012. Financial aid and student loan rules change often, so some details may be out of date. Ask us about your situation.
Figures released by the Federal Reserve Bank of New York on November 27 show that student debt has exceeded $1 trillion this year. According to the estimates, unpaid student loans surpass credit card debt by almost $300 billion, making it one of the largest financial burdens faced by Americans.
However, a recent story from U.S. News and World Report shows that despite facing gigantic monthly loan payments, millions of borrowers who qualify for government assistance aren't taking advantage of programs available to them.
Of the estimated 36 million Americans who make monthly payments on their student loans, only slightly more than 1 million take advantage of the income-based repayment (IBR) option enacted by the Obama Administration back in 2009.
The biggest reason these programs are underutilized stems from a lack of awareness, according to the source. The Department of Education can't calculate exactly how many former students qualify for the program, though it is clear, the source reports, that a vast number of potential applicants are unaware of the program's existence.
"Certainly more people need to know about IBR and could be benefiting from IBR. Defaults are rising even during the period that borrowers have access to IBR. Far more people could be benefiting from it right now," Lauren Asher, president of the Institute for College Access and Success, a nonprofit that promotes higher education availability, said in the story.
The New York Fed reports that when the IBR was first enacted in July 2009, roughly 8.5 percent of student loans were in default. Even though the initiative was put in place to lower that number, it has climbed to 11 percent as of August.
If you are one of the millions of postgrads having trouble repaying student loans, contact one of the experts at College Financing Group to learn what programs may be available to lessen your debt burden.