The traditional measures of nonrepayment — delinquencies and defaults — might be fine for most types of loans, but not for outstanding student loans, nearly all of which are held or backed by the federal government, according to a commentary in today’s Wall Street Journal. Lawmakers have provided students with options that let them punt on repayment without triggering delinquency or default. Lately, students have been availing themselves of those options at rising levels, according to the commentary. The forbearance benefit, for example, lets borrowers postpone payments for up to three years. By law, loan-servicing companies have a lot of discretion to grant forbearances, and getting one usually takes only a phone call on the part of the borrower. Some borrowers might have to complete a simple form and meet a payment-to-income test. But overall it is the easiest and fastest way for a borrower to suspend student-loan payments, according to the commentary. (Subscription required.)
http://www.wsj.com/articles/jason-delisle-the-hidden-student-debt-bomb-…
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