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Bankruptcy also had to cry but also Sino-US campus loan business comparison

Time: 2016-09-08         Source: Business Week         Author: Shahien Nasiripour

Recently, China's campus network chaos frequently. The campus loans this beloved goods, at the beginning of the United States was born, as if to move with the Chinese campus loans are different. What led to such a big difference? We may wish to look at the comparison of all parties in the campus loan business between China and the United States.

Data show that college students spend over 1000 billion yuan market scale. At the beginning of the academic quarter, university students with no steady income have become the "number one goal" of campus network loans as student spending rises day by day.

According to the survey, 53% of students apply for campus network creditStudent loanThe purpose is shopping - buy cosmetics, clothes, electronics and more. Due to a lack of repayment ability, the "transition" from general borrowing to loans such as "naked loans", "loan sharks" and "violent collection" has also made campus loans criticized.

In its previous report, the blog agency commented that China's online student loans have taken a different path from that of the United States. Instead of focusing on supporting education, online student loans have "seduced" student purchases by installments, leading to some People have to bear the heavy debt burden because of overconsumption without getting out of school. In the face of such a sharp contrast, people can not help but want to have a glimpse of the status quo of student loans in the United States. Will the United States be better than the current chaos in China?

Government-backed student loans are a big deal: about one in six U.S. adults owe student loans, which are owned or guaranteed by taxpayers and the federal government annually pays co-operative loan service providers and debt collection agencies Nearly 2 billion U.S. dollars have been paid to these companies for borrowersRepaymentAnd is responsible for nearly $ 1,300bn of federal student loan monthly check-in.

The U.S. Department of Education informs the public about federal students every three monthsLoan repaymentThe latest situation. Bloomberg analyzed figures for the federal student loan portfolio as of June 30. Here's what we found.

There are fewer people who do not repay on time

In recent years, judging from the loan balance, the situation of deferred payment has been greatly reduced. In 2013, a quarter of student loans delayed repayments for more than 31 days. Since then, the delinquency rate has been steadily declining. By June 30 this year, the figure has been reduced to about 19%.

Bankruptcy has to cry Also such a student loan management in the end how bad?

That number may reflect the effect of the Obama administration's easing of a repayments program whereby borrowers can determine the monthly repayments based on income rather than borrowing, and the plan also improves Federal debt partner services.

Still a lot of people have repayment difficulties

A closer examination of the wider pool of repayments (all those who leave school for a period longer than the statutory 6-month grace period) reveals that the improvement in the default rate is not as good as it is.

Bankruptcy has to cry Also such a student loan management in the end how bad?

Of every $ 5 loan, only less than $ 3 is repayable on time. As many as 42% of the loan balances were overdue, temporarily deferred, or defaulted, or went bankrupt, and some borrowers wanted to persuade the federal government that they would never be able to pay their debts due to physical disability.

Defaults continue to rise

In 2015, over 1.1 million student loans were denied by the Ministry of Education.

The situation is even worse than it sounds.

Bankruptcy has to cry Also such a student loan management in the end how bad?

This figure of default does not fully reflect the real tricky level. Only when the borrower did not pay back the money within 361 days would the Ministry of Education count as a default, and the Obama administration did not announce it to a bank-based terminated project to get federal student loans through other loans Number of defaulters.

The White House peddles revenue-based repayment plans aimed at deterring rising rates of default. Ted Mitchell, the deputy minister of education, said last year that the government's goal is "zero default rate." However, the federal data show that the default rate of loans in the first three quarters of this year increased by 2.7% over the previous year.

More borrowers were scared by the amount they should pay back

To always set repayments based on income, borrowers must report their income to the debt service each year, but not all borrowers follow this rule, for reasons such as forgetting, service provider mistakes, etc. .

The result is that there is a substantial increase in the monthly repayments. In fact, about a quarter of the debtors who join the government revenue plan no longer pay based on their income, which increases their risk of default.

Bankruptcy has to cry Also such a student loan management in the end how bad?

Earlier, the Ministry of Education appeared to have taken the trouble with service providers and vowed to renew their contracts to give priority to service providers to help borrowers with difficult loans. But now the Ministry of Education also said that debtors are the object of accusations. Spokeswoman Kelly Leon said: "It is the borrower's responsibility not to miss the repayment period."

Loan repayment time longer and longer

More than half of the debt is scheduled to be repaid 10 years after its debt matures for the first time, compared with four years ago, with most of the scheduled debt repayments scheduled for less than 10 years.

According to the Federal Reserve Bank of New York, this is mainly due to the expansion of the income-based repayment plan, which extended the debt-service deadline to 20 or 25 years. As a result, a considerable portion of student loans will still not be paid off among Americans aged 40 and 50.

Bankruptcy has to cry Also such a student loan management in the end how bad?

Federal financial regulators and the U.S. Department of the Treasury have warned that the heavy student debt burden will dampen household spending and reduce the Americans' ability to obtain new loans, thereby hindering spending or investment in other projects. In 2013, President Barack Obama issued a disturbing warning: "Our economy can not afford trillions of dollars in outstanding student loans, and because students are incapable of paying back, many of them may not be able to pay back ."He said.

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