Still Defaulting on Those Student Loans

The default rate on student loans is actually rising. According to a piece by Tamar Lewin in the New York Times:

The default rate on federal student loans continued to rise last year, with the rate for students at for-profit colleges — already the highest — rising the fastest.

Education Secretary Arne Duncan said Monday that the overall student loan default rate in the 2008 fiscal year, the latest period for which data is available, was 7 percent, up from 6.7 percent the year before and 5.2 percent in the 2006 fiscal year.

Interestingly, it appears the default rates for students who earned degrees from community colleges have actually gone down slightly. The Community College Times reported that “the average default rate of community college students with federal student loans dipped by about 1 percent to 6.7 percent.” Most community college students, admittedly, don’t take out loans to attend school. That drop represented only about 523 students.

Students at for-profit institutions, however, represent slightly more than a quarter of borrowers. People who attend these schools represent some 43 percent of student loan defaults.

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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