Student Loan Default Rates
Taken from the Dept of Education
Student Loan Default rates have been very consistent for the last 20 years that they have reported. Default rates for 4 years colleges average 25%, 2 year college default rates average 35% and private for profit colleges average 45%. Some criticism has been made that some colleges encourage students to go into debt for degrees that fail to equip students to repay the debt and ballooning the default which ultimately taxpayers are forced to repay. The lenders themselves have found such lending highly profitable and among the default charges include a 25% penalty when the lender first declares the loan in default similar to credit card over the limit fees.
The draft FY 2008 national student loan cohort default rate is 7.2 percent. The draft rate increased from the national student loan default rate (FY 2007 official rate) of 6.7 percent and the national student loan default rate (FY 2006 official rate) of 5.2 percent.
The FY 2008 draft cohort default rates represent the percentage of borrowers in the Federal Family Education Loan and William D. Ford Federal Direct Loan programs who began repaying their loans between Oct. 1, 2007, and Sept. 30, 2008, and who defaulted on or before Sept. 30, 2009.
Each February, the Department releases draft rates for each institution. Schools have the opportunity to review their draft rates and may challenge the calculations. Draft rates do not result in sanctions and can change between February and the release of the official cohort default rate in September. Therefore, individual institutional draft rates are not made public.
Borrowers needing assistance in repaying their student loans can visit www.federalstudentaid.ed.gov or contact the holders of their loans to learn about repayment options. For help locating their loan holders, borrowers may access www.nslds.ed.gov or contact the Department’s Federal Student Aid Information Center at 1-800-4-FED-AID (1-800-433-3243).
Additional information on the national draft Direct Loan Program and Federal Family Education Loan Program (FFELP) student loan default rates as well as aggregate national draft rates by type of postsecondary institution are attached to this announcement.