By Lindsay Sax
Americans have racked up almost one trillion dollars in student loan debt. The rate at which students are defaulting on loans continues to grow every year, but there are options available to keep students out of trouble.
Options exist at the college to avoid taking out loans, or if financial aid does not cover the entire cost of tuition. There is a three installment payment plan offered through the bursar’s office. There are consequences to not paying tuition on time.
“You can’t add classes, you would have to come in person or call to drop classes and you can’t get transcripts,” said Gayle Callahan, director, Bursar’s Operations. “It keeps you from adding classes for this semester or future semesters until that’s paid in full.”
If payment plans are not an option, students may take out loans, but payment problems happen. In 2011, 10 percent of all borrowers defaulted on their student loans. The national average for a two to three year public college was 15 percent, according to the Department of Education. The college’s rate was 10.3 percent.
Loans are considered in default when payments are 270 days late. The consequences for defaulting on loans can range from bad credit scores to having to immediately pay the loan. American Student Assistance (ASA) says that in the first five years after making payments, 41 percent of borrowers will be delinquent on payments, and that more than half of the students at two year colleges are delinquent on payments or already defaulted on their loans.
There are income based repayment plans available to borrowers struggling to make payments. These plans include income-contingent repayment, income-based repayment, public service loan forgiveness and pay as you earn. Currently 1.6 million borrowers are enrolled in these plans.
“No one knows how many people are eligible, since we don’t have data on borrowers’ income,” said Lauren Asher, president of the Institute for College Access and Success, in an article in the New York Times. “But we do think there are many more people who could benefit.”
Starting this month, the Department of Education will be contacting borrowers who are struggling to repay their loans via e-mail about options available to them, according to the New York Times. The department says about 600,000 borrowers defaulted on loans last year, and many of them could have avoided that if they knew about the options available to them.
“We think there are lots of people who could benefit from our income-based repayment programs but haven’t signed up, and we want to get to them before they default,” said Arne Duncan, education secretary, in the New York Times. “The challenge is getting the word out.”
The department is trying to make enrolling in programs easier for borrowers by putting the application online and by easily being able to import tax return information.
For students enrolled in the payment plan, the last payment is due Oct. 15.
For information about changing payments go to http://www.direct.ed.gov/ or http://www.jccc.edu/bursar/index.html for information about credit class payment plans.
Contact Lindsay Sax, copy editor, at lsax@jccc.edu