More Students Defaulting on Student Loans
New numbers just released on student loan defaults reflect the tough economic times.
The draft default rate on student loans rose to 7.2 percent in fiscal year 2008, up from 6.7 percent in 2007 and 5.2 percent in 2006, the U.S. Department of Education announced Sunday.
Repaying student loans was toughest for borrowers who attended for-profit institutions (11.9 percent default rate). Those who attended public colleges had a default rate of 6.2 percent, and those from private colleges, 4.1 percent.
Those who borrowed from bank-based programs had a higher default rate of 7.8 percent compared with 4.9 percent for those in the competing federal direct-loan program.
These new figures are a draft; final numbers will be released in September after schools have a chance to review the data.
Students are facing a bleak job market, but they also need guidance when it comes to taking out loans in the first place. So many are carrying high debt loads and taking longer to get through school because of finances as reported last month here. We can only hope for a brighter report next year.