The way loans are currently structured is leading to double, and even up to tripling and quadrupling, debt for some loan holders. Especially because of how interest compounds over the years.
“Loans doubling, tripling, quadrupling, it really does happen all the time,” said Persis Yu, director of the Student Loan Borrower Assistance Project at the National Consumer Law Center, according to CNBC.
Schools will lose the ability to participate in financial aid programs if too many students default on loan payments within three years. In response, loan companies hire consultants to encourage struggling students put their loans into forbearance. It’s not necessarily a good fix, though, and there are more cost-effective ways for students to fix their loan problems.
Image via The Student Loan Report.