The curious details of student debt defaults reveal private for-profit "education" businesses have been looting the taxpayer for "tuition" to provide short-duration training for jobs which don't exist for their "graduates".
Those with the SMALLEST loan balances are the MOST likely to default on their loans, because these debts were incurred without obtaining a usable education.
It could be an aborted effort at college or more often to pay for a shyster for-profit training education of short-duration like entry-level phlebotomist or repair person whose new career could barely cover expenses, let alone a student debt.
Most often the student-debt of loan defaulters paid for short-lived training at a "school" whose graduates rarely ever find employment.
Almost 1 in 3 people who owe less than $5,000 for their education default within four years, compared with just 15 percent of borrowers who owed more than $35,000, the Urban Institute found.
Those with student debt of more than $35k are more likely to have obtained an education which is more likely to provide entree to meaningful employment.
Once defaulted on student debt, maintaining employment becomes more difficult. Some states suspend or revoke state-issued professional licenses, and some states suspend a driver's license because of a defaulted loan.
Other problems include wage garnishments, tax offsets, and other methods of loan collections, all things employers don't like dealing with.
Experian notes by the time a person's student loans fall into default, they will see their credit score tank another 60 points, to an average of around 550, which is the score you'd achieve with a new bankruptcy, but student debt cannot be discharged by bankruptcy.
Not surprisingly, the Urban Institute has found "Those who default almost always lack any awareness of options for dealing with the debt, such as deferments, forbearances, income-driven repayment and loan forgiveness."
"Loan rehabilitation" can be offered only once to student loan borrowers.
The program requires you to make nine "voluntary on-time, reasonable and affordable monthly payments," as determined by the loan servicer, Griffin Rubin said. Then, you'll be out of default, and the record should be removed from your credit history.
We've run out of other people's Social Security taxes needed to subsidize our low income tax rates.
