Student Loan Defaults Increasing

Apparently the default rates on student loans, the percent of loan holders who fail to make the payments due on their accounts, are climbing. According to a short piece by Kelly Field in the Chronicle of Higher Education:

The default rate climbed to 7.2 percent, from 6.7 percent. It was nearly three percentage points higher for borrowers in the bank-based program (7.8 percent) than for those in the competing direct-loan program (4.9 percent).

As usual, the 2008 rate was higher for borrowers who attended for-profit institutions (11.9 percent) than for borrowers who attended public colleges (6.2 percent) or private colleges (4.1 percent).

This information comes from the U.S. Department of Education, which Sunday released the student loan default rate information for fiscal year 2008. The default rate back in 2006, when the economy was strong, was 5.2 percent.

Daniel Luzer

Daniel Luzer is the news editor at Governing Magazine and former web editor of the Washington Monthly. Find him on Twitter: @Daniel_Luzer