Federal Student Loans: What Happens If You Don't Pay? [POLICYbrief]

Since 1958, the United States federal government has offered loans to help college students pay for their education. Over the past decade, however, the default rate on these loans has risen sharply, with over 25% of former students failing to repay their loans.

What happens when federal student loans aren’t repaid? Student loan lawyer Adam Minsky and Jason Delisle of the American Enterprise Institute explore the troubling landscape of federal student loan repayment.

As always, the Federalist Society takes no particular legal or public policy positions. All opinions expressed are those of the speakers.

Differing Views:

Brookings: The looming student loan default crisis is worse than we thought

The Washington Post: The number of people defaulting on federal student loans is climbing

CNBC: Trump administration may make it easier to wipe out student debt in bankruptcy

The Hill: Is student loan debt the next financial crisis?

NPR: Is The Student Loan Crisis Fact Or Fiction?

The American Prospect: The Argument for Tuition-Free College

[ifeawosika]

No one blaming the people forcing kids to go to college when they cant afford it? Why are universities bleeding students dry?

[maxcohen]

Bankruptcy doesn't necessarily apply to student loans. You can file for bankruptcy and still owe all of your student loans.

[Josh-lqnk]

Go to community college the first two years....then transfer in state. Boom

[Dave-ewjb]

My nursing degree was 8k at a community college. A nursing degree that my brother got at Utica college was 80k. Same degree with the same income off the bat, and the hospital is paying for my bachelors now while I work. The problem is that schools bleed students dry and charge insane prices for education that has no reason to cost that much. The government is also the problem for not capping how much they will give out so naturally the schools know they can keep asking for more and more.

[Fantasy_huddle]

The 20-25% interest that they are changing is mind blowing. How did they allow for them to do this!? 10, 000 dollars in fees and charges for a 40, 000 dollar loan!?! That is terrible.

[jtjimenez]

People dont go into debt for a college degree! That job that you hope to get once you graduate is already given away to another person who is underqualified as was a referral. College is a business! America is a business!

[Eric_Tennant]

I haven't paid for over 10 years. I'm at $75, 000+. Not paying $0.01 more on it. I also left them no options to take it.

[benjaminmcfadden]

Living at home and a part-time job is the way to go

[zack]

I’m telling everyone right now. This is a bubble waiting to burst. It’s just like the housing bubble that caused the recession and they refuse to learn their lesson. We just got out of the recession. If anyone is hurting with debt I hope you get out of it and live a happy life you deserve.

As for the ones causing this shit storm I hope they get everything that’s coming to them and I sure as hell will not feel sorry for them.

[jomshobbies]

someone is definitely making so much money with all these student loans

[djpnominal]

So if you are in default....They are stealing your tax returns (yes I said stealing because you work your butt off all year and they come take the money you've earned) They, as a result of going into default, have raised the amount you own do you do? Just let them take your tax return each year and eventually garnish the little bit of money that's barely putting food on the table? What do you do. Actual answers...??

[sisila]

What about the predator lending crisis where they were taking people who qualify for student grants and applied with their information for a fedloan making the student believe that they are getting free education with their grant? Most of these student's wouldn't of qualified for a loan based on credit criteria's such as having a job, not attending the school for a period of time for which the loan would require etc. Why doesn't anyone go into depth about that? Also, what about student's who never received the funds because the school kept it and didn't write a check out to the student it was originally for?

[shannonjohnson]

Living as frugal as I can and working my tail off of get out of student loan debt. Unfortunately I won’t be able to graduate school unless I can pay as I go because I’m not interested in taking out any loans every again in my lifetime.

[realtruenorth]

Why should I have to pay interest to the federal government when I didn't cause inflation? Also the government is not supposed to profiteer off students.

[aifesolenopsisgomez]

If the student loans didn't exist, I'm pretty sure college prices would drop by a lot.

[xxXXxx-teif]

everyone i know who graduated from college, regrets it .

[VibingCat]

Blame the employers for requiring a degree in order to get hired.

[brooksfamily]

It should go to colections and disapear after 7 yrs like all other loans

[peterkinasz]

‪Why doesnt the US government forgive the accumulating interest on all existing college loans (both private & govt) and let borrowers just pay off the original principals on their loans? Obviously our govt has done nothing except create some incipid repayment consolidation loans that prolong this debt on the graduates who cant find good paying jobs. Unecessary foreign aid could B diverted 2 help subsidize colleges & universities with tools 2 effectively teach curriculums emphasizing science, technology, or medicine (not fine or liberal arts, social studies, law, sports, etc) College tuitions and professor salaries need 2B capped. All future college loan interest should also B capped permanently @ 2% with no compounding. We need smart, educated, proactive people - they are the antidote to a stupid government.‬

[Kenny-hrwl]

"A program to allow students to go to school without needing to borrow." It's called community college or the gi bill.