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We must also cry after bankruptcy.

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

Recently, chaos in China’s campus network has become more frequent. The campus loan, which arrived at the beginning of the United States, seems to be moving differently from the Chinese campus loan. What caused such a big difference? Let’s take a look at the comparison between the parties in the China-US campus loan business.

The data shows that the scale of the university's consumer market in stages exceeds 100 billion yuan. At the time of the opening school season, with the increasing consumption of students today, universities without stable income generated the "number one goal" of campus online loans.

Survey shows that 53% of students applying for campus online loans are largeStudent loansThe purpose is to shop - buy cosmetics, clothes, electronic products and so on. Due to the lack of repayment ability, the “transformation” of loan methods such as “naked loan”, “high interest loan trap” and “violence collection” from general lending has also made campus loans suffer.

In previous reports, Boshe commented that China’s online student loans have embarked on a different path from the United States. They did not focus on supporting the academics but instead “seduce” students’ shopping through installments, resulting in some People who have not gone out of school are burdened with heavy debt because of excessive consumption. Faced with such a sharp contrast, one cannot help but want to take 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-sponsored student loans are a big business: About one-sixth of American adults owes student loans. These loans are owned or guaranteed by taxpayers, and the federal government needs to be a cooperative loan service provider and collection agency each year. Paying nearly 2 billion U.S. dollars, these companies provide borrowersRepaymentCounseling and responsible for the monthly collection of nearly 1.3 trillion U.S. federal student loans.

The U.S. Department of Education informs the public of federal students every 3 monthsLoan repaymentThe latest situation. Bloomberg analyzed the number of federal student loan portfolios as of June 30. The following is what we found.

There are fewer people who fail to pay on time

In recent years, with regard to the balance of loans, the situation of deferred repayment has been greatly reduced. In 2013, a quarter of student loans were delayed for more than 31 days. Since then, the default rate has been steadily declining. By June 30 this year, the figure has dropped to about 19%.

Bankruptcy has to cry. How bad is such student loan management?

This figure may reflect the effect of the Obama administration's promotion of a loose repayment plan, according to which the borrower can determine the monthly repayment amount based on income rather than the amount of the loan, and the plan also improves. Federal debt partner services.

Still many people have difficulties in repayment

If we look more closely at the broader repayment groups (all those who have left school for a grace period of more than six months), we will find that the improvement in the delinquency figure is actually not that beautiful.

Bankruptcy has to cry. How bad is such student loan management?

Of every $5 loan, less than $3 is repaid on time. As many as 42% of the loan balance is either overdue, delayed, or defaulted, or bankrupt, and some borrowers wish to convince the federal government that they will never be able to pay their debts due to physical disabilities.

Default situation continues to climb

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

The situation is even worse than it sounds.

Bankruptcy has to cry. How bad is such student loan management?

This number of breaches does not fully reflect the truly tricky degree. Only when the borrower has not paid back the money within 361 days will be counted as a breach of contract by the Ministry of Education, and the Obama administration has not publicly announced that it has obtained a federal student loan through other loans in a bank-based terminated project. The number of defaulters.

The White House peddled income-based repayment plans in order to prevent the rise in the uncontained default rate. Ted Mitchell, the deputy minister of education, said last year that the government’s goal was a "zero default rate." However, federal data shows that the loan default rate in the first three quarters of this year increased by 2.7% from the same period of last year.

More borrowers are scared by the amount

If you want to establish the repayment amount according to your income situation, the borrower must notify the debt service provider of its own income information every year, but not all borrowers have complied with this rule. The reasons include forgetting, mistakes made by service providers, etc. .

As a result, the monthly repayment amount has increased significantly. In fact, about a quarter of the debtors who join the government's income plan are no longer repaying their income, which increases their risk of default.

Bankruptcy has to cry. How bad is such student loan management?

In the past, the Ministry of Education seemed to think that it was the front door of the service providers. They vowed to re-sign the contract so that the service provider would give priority to assisting borrowers with difficulties to make payments. But now the Ministry of Education has also stated that debtors are the target of this accusation. Spokesman Kelly Leon said, "The borrower is responsible not to miss the repayment period."

Borrower's loan repayment time is getting longer

More than half of the debt settlement time was arranged 10 years after the debt first expired, and four years ago, most debts were scheduled to be paid within 10 years.

According to the New York Federal Reserve Bank (Federal Reserve Bank of New York), this is mainly due to the expansion of the income-based repayment plan, which extends the debt settlement period to 20 or 25 years. As a result, a considerable part of the 40-50-year-old American still has not repaid student loans.

Bankruptcy has to cry. How bad is such student loan management?

The Federal Financial Supervisory Authority and the U.S. Department of the Treasury have warned that heavy student debt burdens will inhibit household consumption and reduce the ability of Americans to obtain new loans, thereby hindering consumption or investment in other projects. In 2013, President Barack Obama sent a disturbing warning: “Our economy cannot afford the trillion-dollar unpaid student loans, and because students are unable to pay back, many of them may not be able to return. ."He said.

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