“it’s a loan and has to be repaid.”
Student Loans: Default Rates Are Soaring :
http://online.wsj.com/article/SB124027600001437467.html
Defaulting on a student loan is worse than bankruptcy. It marks credit history forever.
“Borrowers having trouble repaying their federally backed loans can call their lender to request that their payments be put on hold until they get back on their feet. Most types of federal loans qualify for “forbearance” — meaning the borrower can suspend payments temporarily but is still on the hook for the interest that continues to build while payments are on hold, which is then amortized over the life of the loan.”
Read the one borrower who said, I don’t want to do that because it’ll raise my payments down the road. So, she just blows off the payment. That is a risk for any lender. Students don’t understand how brutal the default is on their long term credit.