By Robert H. Nelson/The Washington PostThe nation’s biggest banks are taking a bigger bite out of student loan debt, as borrowers are more likely to default on their loans and some are getting them for less than the value of their homes.
The trend has caught the attention of Congress and the Obama administration, which have been grappling with how to help young borrowers refinance loans that they have taken on with big banks.
The Department of Education said last week that student loan borrowers were taking on $1.4 trillion in outstanding loans in 2017, up nearly 12 percent from the previous year.
That figure is up from $1 trillion in the previous four years.
More than $1 billion in loans have been defaulted, with some going into default for up to 30 days.
The largest banks, including Wells Fargo, JPMorgan Chase, and Citigroup, are taking on a greater share of student loans.
Wells Fargo is taking on roughly $6 billion of outstanding loans, and JPMorgan Chase has taken on about $5 billion.
Citigroup and Bank of America have taken in more than $3 billion each.
The biggest banks were not the only ones to take a hit.
The National Association of Home Builders, a trade group that represents builders, said that home loans made to borrowers in the last three months were up just 1.1 percent.
That was just below the 5.3 percent gain seen in the first three months of this year.
“It’s the worst year-over-year decline since 2009,” said NAAHB President and CEO Tom Harkin.
The NAHB says that loans made in January and February were down 0.3 percentage points.
“Student loans are a growing share of the economy,” said Jason Furman, the Treasury secretary under President Donald Trump.
“But the federal government is still struggling to find the money to fund it, and many are facing severe challenges.”
The Department has put $6.9 billion into loans for students to refinance, and a small portion of that is going to banks, according to the department.
The money is earmarked for borrowers to reflate their loans to lower interest rates and provide them with a cushion in case they default on payments.
The Education Department’s loan refinance program was launched in 2015 to help borrowers reflate loans.
The goal was to help student loan balances to $30,000.
The government estimates that it has paid out $1,300,000 in principal and interest to students.
A total of 3.3 million students have taken out loans for the refinance this year, according a Department of Labor report.
About $600 million in loans were refinanced in 2017.
The rest of the loans are still outstanding.
The refinance process can be complicated and costly.
There is a requirement that borrowers repay their loans within three years.
There are also requirements to have an income to qualify for the loan, pay all of the interest on the loans, keep up with the monthly payments and to pay a penalty on loans that do not meet all the requirements.
The department does not provide details on how much the refinancing program costs.