Many college-bound students might envision a pretty cut-and-dry strategy to living the American dream: get accepted to a school, earn a degree, land a lucrative job, and live happily ever after. Simple plan, right?
Well, not always.
The reality for millions, in particular historically underserved groups, includes the challenge of repaying student loan debts. In fact, as of the start of the pandemic, 7 million student loan borrowers are delinquent or in default, totaling $161 billion, according to the U.S. Dept. of Education. Disproportionately affected are people of color, women, those in rural communities, recent graduates and seniors. Moreover, financial security often becomes further elusive because of roadblocks caused by unemployment, legal actions, wage garnishments, or impaired credit access.
For its part, Equifax is partnering with Invest America starting in June 2021 to analyze various stressors impacting those most at risk of student loan default. Equifax will enhance its proprietary data to build a granular understanding of the student loan population. The analysis will look at basic loan payment information that includes payment history, loan size and status, age of the loan, the loan servicer, and the individual loan status.
“Equifax focuses on helping people live their financial best, and collaborating with Invest America on this project will drive better inclusion,” said Beverly Anderson, Equifax President of Global Consumer Solutions. “People go to college to create better opportunities for themselves. Those opportunities should not be compromised, hindered, or unattainable because of student loan debt that may be beyond a student’s capacity to pay.”
New data insights derived from the Equifax partnership will help Invest America design services to support borrowers in or at risk of default. Invest America focuses on building solutions to eradicate defaulted student loans in the United States, with a belief that a learner’s education investment should lead to a life of independence, prosperity and growth.
“We believe we can eliminate the crisis of $161 billion in defaulted student loans by executing a comprehensive, strategic and operational program that consists of three distinct efforts: prevent delinquency, support the borrower to effectively navigate the repayment journey, and ultimately build wealth and not debt,” said Invest America CEO Kahlil Byrd. “Currently, there are too few products and services to effectively protect the financial health of a vulnerable student loan borrower in the crucial 10 years after they graduate or leave school. This data will accelerate our ability to drive this process to bring borrowers from default to wealth creation.”
Equifax will also broaden its data set by appending credit information, demographic and geographic information. Insights gathered from this data, which is expected to be available in the third quarter, will provide a detailed snapshot of the causes for default that can be used to inform policymakers, debt counselors and others on the best approaches and resources needed to assist borrowers.
“The output from the data and analysis will be a comprehensive view of the student loan experience,'' said Invest America President and COO Lea Crusey. “This will humanize borrowers by providing insights into their daily lives and delivering a meaningful understanding of their financial realities. It will allow us to initiate our work from a position of strength to minimize delinquency and default, and maximize the opportunity for building wealth and prosperity for millions of Americans.”
The Equifax and Invest America partnership is another component of the Equifax commitment to strengthening financial inclusion and equality, and to help create better access to credit so underrepresented consumers are not perpetually left out of the economic empowerment conversation.
“We need more resources around student loan defaults and ways we can address this mounting crisis,” said David Stiffler, Equifax Foundation President. “Student loan debt is causing instability in financial well-being within our communities and the economy, affecting certain groups disproportionately, so we must innovate and collaborate in unprecedented ways until this idea of financial freedom has deeper meaning for more consumers.”
Here’s what happens if you default on your student loans
10 tips for managing your student loan debt
Borrowers discuss challenges of student loan repayment