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Debts that can’t be repaid won’t be

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The Consumer Financial Protection Bureau has done a breakdown of the repayment status of the one trillion dollars of outstanding federal student loan debt (this figure doesn’t include private student loans), held collectively by nearly 51 million Americans.

Here are the numbers:

Total federal student loan debt: $999.7 billion

In repayment: $493.7 billion

In school: $146 billion

In grace period (these are people who graduated recently): $47 billion

In deferment: $122.1 billion

In forbearance: $91.1 billion

In default: $89.3 billion

Other: $9.5 billion

So only 49% of federal student loans are currently getting paid back. Another 19% aren’t being paid back because the people who owe the money are either currently in school or graduated recently. That leaves nearly one-third of federal student loans either in deferment, forbearance, or default. (A commenter notes that some and perhaps most of the loans in deferment are held by people who are doubling down on more degrees).

Matt Leichter:

I’d love to see a comparison to credit cards, but aside from class concerns, I think it’d tell us that the federal loan program has been a spectacular, embarrassing failure.

Basically, contemporary America has moved from a model of higher education in which a lot of people could afford to go to college, to one in which most people can’t. And we’re putting off the social upheaval this shift might cause by loaning people money they can’t repay.

The difference between this and a Ponzi scheme is that a Ponzi scheme is illegal.

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