Dept. of Ed. Releases Lifetime Student-Loan Default Rates
New data released by the U.S. Department of Education reveal that the rate at which student borrowers default on loans over the lifetime of the loan continues to be higher for those attending for-profit schools. The cumulative lifetime default rate paints a broader picture of the struggles that students are having managing debt over time. Typically, the cohort default rate is cited, but it reflects the two-year window of activity after borrowers enter repayment and tells just part of the story.
In 2008, here's how the cumulative lifetime default rate looked for students in the Direct Loan and Family Federal Education Loans programs over the lifetime of the loan at various types of institutions:
For students at...
Two-year, private, nonprofit: 15.6 percent
Two-year public:15.6 percent
Four-year private, nonprofit: 5.6 percent
Four-year public: 6.3 percent
The overall cumulative lifetime rate was 9.8 percent for the 2008 cohort, down slightly from 10.4 percent the previous year. Projecting out 20 years as to what the default rates in total dollars might be for students, the Education Department puts the estimate as high as 46 percent for students at two- and four-year proprietary schools and 31 percent at two-year public and private nonprofit schools.
When considering the action of students just two years after repayment has started, the cohort default rate was 7 percent in 2008, an increase from 5.1 percent in 2004, according to the data released by the department Dec. 20.