These days, millions of people across the country are struggling to deal with their outstanding student loan balances, and problems related to delinquency and default on these accounts are becoming a major political issue nationally. As such, one U.S. Senator wants banks and federal regulators to do more to work with these borrowers to alleviate some of the stress.
Currently, student loan debt nationwide is hovering somewhere above $1 trillion, and is being added to by the billions every month, but at the same time, more of these borrowers are falling behind on their payments and running into significant difficulties as a result, according to a report from the office of U.S. Sen. Jack Reed, a Democrat serving Rhode Island. Recent data suggests that as many as 850,000 student loan borrowers nationwide fell so far behind on their payments that they defaulted on them, and their debts have a total combined value of more than $8.1 billion.
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However, as the issue grows more pressing and prevalent, lawmakers are taking notice, the report said. Reed, along with six of his fellow senators (Richard Durbin of Illinois, Tom Harkin of Iowa, Al Franken of Minnesota, Elizabeth Warren of Massachusetts and Sherrod Brown of Ohio), recently wrote a letter to 13 national financial institutions and four federal regulatory agencies, saying that something needs to be done about this widespread and growing problem before there is another debt bubble.
“We need the public and private sector to work together to prevent a calamity for middle-class students,” said Reed. “I will continue working to make college more affordable, and I hope we can get everyone to the table to find workable solutions to controlling costs and reducing the debt burden for students and families.”
In particular, the letter to the regulatory bodies asked them to provide Congress with clear guidance to help allow students to find greater flexibility in dealing with their private student loans in particular, the report said. About $150 billion of all outstanding student loans are held by private lenders.
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The average college student now graduates not only with tens of thousands of dollars worth of student loan debt, but also significant outstanding balances on auto loans and credit cards, which can altogether endanger the ability of young adults nationwide to become financially independent soon after they leave school.
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