Headlines regarding student debt were on the front pages earlier this year when college debt surpassed credit card debt. A recent report shows that more and more students are falling behind on payments.
The Federal Reserve Bank of New York said in a report that the number of students falling more than 90 days behind on their student loan payments climbed more than three percent from 2011 to 2012. About 12 percent of students are in the 90-plus days delinquent category.
Debt related to student loans jumped by $20 billion to nearly $900 billion in 2012. But in July this year, the Consumer Financial Protection Bureau announced that federal student loan debt topped $1 trillion. To make matters worse, due to the federal sequestration, interest rates on federally subsidized student loans doubled to 6.8 percent. That scare was brief as Congress finally stepped up and pushed the interest rates back to previous levels.
Regardless of the reasons for the skyrocketing costs of higher education, students, both traditional and non-traditional, line up at the admissions office during times of financial crisis. When the job market goes south, there’s always education to train displaced workers in a different and more lucrative career path.
Many of these students are taking out student loans, not only for tuition but also for living expenses, which means the debt racks up quickly. The average student loan debt for Americans today has topped $24,000. Students at prestigious universities can easily top $100,000 in debt.
About 10 percent of college graduates will pay $40,000 for their degree. About 70 percent of students at public universities borrow and about 90 percent of private university students borrow to pay for their education.
With nearly 40 million former students living with student loan debt, about 15 percent of them have missed a loan payment. There is at any given time around $85 billion past due. According to one study, between 2004 and 2009, only 37 percent of students were able to pay their monthly installments on time.
This means more and more students are finding themselves in collections with debt collection
agencies. Borrowers in their 40s have the highest delinquency rate followed by those in their 30s. But it’s students who drop out before finishing their degrees that are at the highest
risk for default or delinquency. About 33 percent of them will likely fall into debt collection.
Unfortunately, the number of students dropping out before earning enough hours to earn a degree is going up. About half of them say that they’re don’t have a job or don’t get enough hours to stay in school. Apart from student loan debt, about 40 percent have around $5,000 or more tied up in other debt.
Omega RMS, llc., is a company that has dealt with former students who have had trouble keeping up with their student loans. Omega treats every debtor with respect and works with
him or her to get back on track. It’s this commitment to ethical and respectable treatment that has allowed them to be an integral part of debt collection agencies for more than 40 years.