The Department of Education has just released the latest information about bad student loan debt. It’s worse than ever. The rate of student loan default, the percent of student loan debtors who failed to make payments on their loans, is increasing. According to the press release:
The U.S. Department of Education today released the official FY 2009 national student loan cohort default rate, which has risen to 8.8 percent, up from 7.0 percent in FY 2008. The cohort default rates increased for all sectors: from 6.0 percent to 7.2 percent for public institutions, from 4.0 percent to 4.6 percent for private institutions.
“These hard economic times have made it even more difficult for student borrowers to repay their loans, and that’s why implementing education reforms and protecting the maximum Pell grant is more important than ever,” said U.S. Secretary of Education Arne Duncan. “We need to ensure that all students are able to access and enroll in quality programs that prepare them for well-paying jobs so they can enter the workforce and compete in our global marketplace.”
That’s oddly vague. It seems like a default rate like that, at just under 10 percent of borrowers, might trigger some thought about working to reduce the student loan burdens Americans carry. A report earlier this year by the Institute for Higher Education Policy indicated that the student default rate published by DOE actually reveals only the most extreme financial cases. In fact, some 63 percent borrowers had trouble paying their student loans on time. Well, one thing at a time.
The default report indicated that people who attended for-profit colleges had the most problems with debt. For-profit student loan default rates rose from 11.6 percent to 15 percent last year.