Student Loan Management Software
Young Americans—those between the ages of 25 and 34—are more likely than those in older age brackets to live in poverty, face unemployment and require welfare assistance.
While last week’s Atlantic article discussing the data focuses primarily on the most destitute young Americans—likely not those who have earned college degrees—it does show the extent of the financial plight of Millennials.
Graduates paying back their loans are defaulting at an alarming rate—in September 2010, 600,000 of the 4 million borrowers scheduled to begin payments that month did not do so for 270 days or more.
But while the federal government has broad discretion in how it can collect from borrowers, private lenders do not have the same luxury. As Reuters notes, private lenders’ need to rely on court orders to garnish wages and they cannot seize tax refunds. And unlike loans provided by the Department of Education, private loans may be subject to statutes of limitation, which curtails the ability of private lenders to collect by taking legal action.
Borrowers who are able to eliminate their debts may look to settle with lenders. Settlement is a complex process, but it’s one that is often an appropriate last resort for many borrowers.
“Some people psychologically want to be done with it,” said Boston-based attorney Adam Minsky, whose clients often turn to settlements as a solution. “They say, ‘I don’t want to deal with this anymore. I want this gone.'”
To reduce the likelihood of legal action and settlements even being necessary, lenders need to be more risk averse when it comes to extending credit to young borrowers. Loan management software helps lenders make more savvy decisions.