Student Loan Default Rates Grow, Reaching 10 Percent in Latest Report
One in 10 student borrowers are defaulting on their college loans within two years of when their first payments were due, according to the latest figures released Monday from the U.S. Department of Education.
The report captures repayment patterns of students who were slated to begin paying back their loans between the fall of 2010 and 2011 and who had defaulted by Sept. 30, 2012.
Default rates have steadily risen every year since 2005. For the 2010 cohort, the national two-year default rate was 9.1 percent; the previous year it was 8.8 percent.
Students attendings community colleges (2-3 year public institutions) have the largest default rates at 15 percent, followed by those from for-profit schools (13.6 percent). Overall default rates among those who went to public postsecondary institutions were 9.6 percent, and 5.2 percent for those who attended private non-profit colleges, the new report found.
The federal government is moving to an analysis of student repayment three years past when the intitial loan is due, not just two. Widening the timeframe paints an even bleaker picture. The three-year default rate for the 2010 cohort is 14.7 percent, up from 13.9 percent for the FY 2009 cohort.
The National Association of Student Financial Aid Administrators has a good analysis and historical look at students' borrowing and default trends on its website. While on the upswing in recent years, the default rate is still relatively low compared to 1990 when it hit a high of 22.4 percent.