Why it’s so hard for students to have their debts forgiven

Neal H. Hutchens, Richard Fossey

Outstanding student loan debt in the United States reached a record US$1.35 trillion in March, up six percent from a year earlier.

About 10 million people who borrowed from the government’s main student loan program – 43 percent – are currently behind or no longer making payments, with more than a third of them in default. Some students are especially at risk, such as those who attended for-profit institutions.

Meanwhile, the loan default rates widely reported by the U.S. Department of Education fail to account for borrowers who default more than three years after repayment begins. These rates also fail to account for the millions of borrowers who are struggling or unable to repay their loans but aren’t included in the numbers because they’ve claimed an economic hardship deferment.