The figures, released by the Education Department on Thursday, are the first comprehensive look at the delinquency plaguing those who hold federal student loans. By the new metric, which the department has never used before, roughly 33 percent of borrowers were more than five days late on one of their federal student loans as of Dec. 31. (Since the department only released individual figures for its four largest contractors, rather than a total percentage, however, the actual figure may be a few percentage points higher or lower.)
Previous measures had put the delinquency rate much lower, masking the true amount of distress among borrowers trying to make good on their taxpayer-backed debts.
Some 41 million Americans collectively carry more than $1.1 trillion in education loans owned or guaranteed by the Education Department, a total that surpasses every form of consumer credit in the U.S. except home mortgages. Thursday’s figure reflects more than two-thirds of the $1.1 trillion total. The remainder is owned by the private sector as part of a bank-based federal loan program that has since been discontinued.
The new measure of borrower distress comes as the White House urges the Education Department to improve its management of the growing federal student loan program and to give borrowers more protections against unmanageable debt loads.