Literature Review #2

Visual : this is the picture on the cover of the report

Summary:

The report begins with statistics on delinquency and defaults in different groups of individuals, separated by type of school, graduation, and use of government aid in loan repayment. It then quickly explains what delinquency and default are, in addition to describing the lack of data previously available on delinquency. It then explains that deferment and forbearance allow many to prevent delinquency or defaulting. The next section of the report explains the types of loans that are often taken, and the effects of defaulting, delinquency, forbearance, and deferment. There is a section specifically on the financial consequences of delinquency. The following section categorises borrowers by age, school type, and repayment results in detail. There is a separate section about the lack of knowledge in borrowers. The following section is about the impacts of delinquency. The report ends with more avenues of research that would shed more light on the problems facing individuals taking out loans.

Citation:

Cunningham, Alisa F., and Gregory S. Kienzel. Delinquency: The Untold Story of Student Loan Borrowing. Rep. Institute for Higher Education Policy, Mar. 2011. Web. 21 Oct. 2013. <http://www.asa.org/pdfs/corporate/delinquency_the_untold_story.pdf>.

Authors:

Alisa F. Cunningham and Gregory S. Kienzel have both published many reports on demographics of college loan borrowers for the Institute for Higher Education Policy, an institution that does research on higher education to allow legislature to be made based on current information to make higher education more available to people.

Key Terms:

Delinquency - failure to make monthly payments within 60 days of the due date

Default - exceeding 270 days in delinquency

Forbearance and deferment - provisions designed to allow borrowers to put off paying their loans

Quotations:

"The fact that some borrowers are able to avoid delinquency by using deferment, forbearance, or other repayment options indicates that the system is working for them. It seems likely that more borrowers could be using those tools." Pg 10
This statement supports my theory that borrowers are not educated about how to manage their loans.
"Borrowers default for a number of reasons, from unemployment to illness to failure to file deferment or forbearance requests on time to simply refusing to meet their financial obligations. The penalties for default are severe: Loan payments can be deducted from a borrower’s wages, income tax refunds can be withheld, or the account can be turned over for collection. In addition, default has longer-term impacts on students’ credit ratings and eligibility for student aid." Pg 14
This only summarizes information, but this information is important to the concept of why people default, and how serious the repercussions of defaulting are.
"About 37 percent of borrowers were repaying their loans without taking any mitigating actions, representing almost 667,000 borrowers in 2005 with nearly $13.1 billion in loans." Pg 18
This figure represents an incredibly low number, far less than half, that are capable of paying back their loans in the manner intended. This point is strong evidence for the cost of debt being higher than the benefits given by higher education.

Value: 
This paper gives a lot of raw data about student loans, which gives me a basis to support my arguments. It also gives some opinions of the authors which give possible avenues of research.