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COLUMN-Confusing data flummoxes fixing of student-loan defaults

(The author is a Reuters columnist. The opinions expressed are her own)

LOS ANGELES, June 2 (Reuters) - A languid economy, soaring education debt and ignorance about available repayment options lead many borrowers to fall behind on their student loan payments, financial aid experts say. How high those delinquencies rates actually are, though, is an open question, which is turning into confusion on how to fix the problem.

The most dire assessment is that one in three borrowers trying to repay student loans was late by 90 days or more at the end of 2012, according to The Federal Reserve Bank of New York in April.

The study excluded borrowers not required to pay, such as those still in school or in grace periods, deferral or forbearance, to calculate an "effective" delinquency rate of 31 percent.

But the Fed's data doesn't line up with other widely reported delinquency and default rates, said financial aid expert Mark Kantrowitz, senior vice president and publisher of Edvisors Network Inc, who closely follows student loan issues.

"I can find no other data source that reports such a high delinquency rate," Kantrowitz said.

Federal student loans are typically considered delinquent after 90 days of nonpayment and in default after 270 days.

The U.S. Department of Education only publishes default statistics, and the official number of borrowers who default within two years of entering repayment is currently 10 percent. The default rate after three years is 14.7 percent.

The default rates have been widely criticized for not giving an accurate picture of the number of student loan borrowers in distress, but various studies have come to different conclusions about how many people have trouble paying their education debt. That number alone may not give an accurate picture of the number of student loan borrowers in distress, experts say.

The lack of clear data about student loan delinquencies makes it difficult to draw attention to the problem and determine what's needed to keep borrowers on track, according to the American Student Association's report "Missing Data: Focusing on the Wrong Factors Could Contribute to Student Loan Distress."

Focusing just on those who default misses the much larger population of struggling borrowers that "languishes in the shadows," suffering damage to their credit scores and other fallout from unpaid debt, wrote authors Paul Combe and Julie Ryder Lammers.

The researchers concluded better numbers could lead to more public pressure to "alleviate the negative financial impacts that student loan debt has on the post-college life of a very large number of borrowers."

"Unfortunately, because of the gaps in data around repayment and delinquency, we can't fix or prevent what we don't know enough about," they wrote.

The fact that any significant number of federal student loan borrowers would fall behind indicates that many eligible borrowers still don't know about federal repayment options that can dramatically lessen their payments, said Reyna Gobel, author of "Graduation Debt: How to Manage Your Student Loans and Live Your Life."

"They could have a payment as low as zero," Gobel said. "This is not an economic issue. It's an education issue."

The federal "income based repayment" option caps payments at 15 percent of discretionary income, defined as the amount over 150 percent of poverty levels for household size. The more recent "Pay as You Earn" option limits payments to 10 percent of discretionary income.

Borrowers with parent PLUS loans or private student loans have fewer options for paying burdensome debt, but they still may be able to avoid delinquency and default, Gobel said.

Parent PLUS loans are eligible for income-contingent plans, an option less generous than IBR or Pay As You Earn but that still caps payments based on income. Private student loan borrowers may be eligible for interest-only payments, forbearance or deferral, depending on lender policies, although the Consumer Financial Protection Bureau has noted that many borrowers have trouble getting affordable repayment plans from private lenders.

Borrowers may be falling behind because colleges often don't apprise students or their parents of their options, Gobel said.

"They do a good job of making sure students get 1/8the loans 3/8," she said, "but not necessarily teaching them how to repay them."

(Editing by Beth Pinsker and Bernadette Baum)