By: Nadia Ramlagan, Public News Service

FRANKFORT, Ky. – Nearly 25% of federal student loan borrowers default within five years of starting the repayment process, according to a new report by The Pew Charitable Trusts.

Most of those borrowers showed signs of financial distress almost immediately when it came time to start repaying their student loan debt, the report says.

Sarah Sattelmeyer, who manages The Pew Charitable Trusts’ project on student borrower success, says the student loan system is outdated, confusingly complex, and often undermines borrowers’ efforts to repay their debt.

“So, we know that before they even enter repayment, some groups are more likely to struggle,” she points out. “For example, counterintuitively, those who owe the least and often less than $10,000, default at higher rates than those with higher balances.”

Sattelmeyer points out that some segments of the population are more likely to default than others.

“Recent research does indicate that African-American borrowers have higher rates of default than others,” she states. “So, this problem needs solutions that include the repayment system, but go above and beyond it.”

Because defaulting on student loans can have serious long-term financial consequences, Sattelmeyer says the government needs to come up with effective ways to help struggling borrowers.

“But a huge barrier in this space is that there’s a lack of data to help us develop evidence-based solutions,” she points out.

The U.S. Department of Education reports that currently about 20% of student loan borrowers – that’s more than 1 million people – are in default, and millions more are behind on their payments.


David M. Higgins II, Publisher/Editor

David M. Higgins was born in Baltimore and grew up in Southern Maryland. He has had a passion for journalism since high school. After spending many years in the Hospitality Industry he began working in...