Student-loan default rates continue to rise, according to data released by the Education Department today.
The data, which reflect the percentage of borrowers who entered repayment in the 2008 fiscal year and defaulted within the next two years, show that 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).
Both programs had higher cohort default rates than in 2007, when 7.2 and 4.8 percent of students with bank-based and direct loans defaulted, respectively.
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).
Comments
1. indianalitchick - May 03, 2010 at 10:54 pm
If the for-profits are recruiting students at homeless shelters (as I read today on another higher-ed news site),what else would be expected?
2. your_rights - May 04, 2010 at 04:40 am
Source: www.finaid.org/loans
"Thus the overall total education loans outstanding, federal and private, is about $763.4 billion."
1. we let them into college without taking/passing ETS exams
2. the Chair threatens you if you don't give them good grades
3. they graduate without being able to ......
4. then, the ungrateful deadbeats don't pay back their loans.
What happened to garnishing wages??
We could afford health care with the money from this one problem alone.
3. 11132507 - May 04, 2010 at 08:23 am
your_rights, I think your math has some gaps in it. The $763B represents loans that have been borrowed, the majority of which are being repaid, so the debt of the "deadbeats" alone won't pay for much health care. Most of that debt is owed to private lenders, who aren't inclined to contribute it to anything but their own coffers. Furthermore, wages can be garnished for student loan defaults. And if you honestly believe that in this economy, all unpaid student loans are the result of "deadbeats," then I'm not sure if you've been reading the paper...as I said, wages can be garnished, but there has to be wages to garnish in the first place.
4. mush9902 - May 04, 2010 at 12:10 pm
Two things: 11132507 is right on...your_rights exemplifies the problem of people graduating college (if they did, the screen name leads me to think otherwise) without critical thinking skills. Secondly, I love how the links to related stories on the right side includes a headline from March 8, 2007: "Default Rateds on Guaranteed Student Loans LIkely to Drop this Year, Data Suggest", reason why perhaps I should end my obsession with daily news.
5. jsch0602 - May 04, 2010 at 08:30 pm
It is not simply the rising cost of an education or the poor economy. Students today do not expect to live the student lifestyle. Cars, cell phones, vacations, restaurants, cable television. Many live better than fully employed adults. On borrowed money.
6. smokeythebear - May 05, 2010 at 08:27 am
@5
It's almost as if college has become so expensive that affording to go is not simply: work hard in the summer, eat ramen during the school year, use the library, like it most likely was when you went to school. Often, its not even a matter of responsible saving for your child's education, since many people have had to raid such future accounts to pay immediate expenses and the rise in college costs are excessively growing relative to most other growth indexes.
When COA is 25-50k/year, the lifestyle costs you describe are real small potatoes. When students and parents realize that there is no way they can attend college without immense debt, regardless of lifestyle, they're less motivated live the life of the ascetic just so they only borrow 24k that year instead of 26k.
7. futureprof7337 - May 05, 2010 at 12:44 pm
Oh. My. God. Did anyone see the recent PBS College, Inc. or some such? VERY relevant to this discussion--I recommend everyone watch it to understand higher education in America today. For one, THE DEFAULT RATES ARE NOT ACCURATE. THEY ARE MORE LIKE 30-50%, perhaps even higher. Read Allan Collinge's work in THe Student Loan Scam. He's got it right. THE SALLIE MAEs, lobbyists, and NELNETS cook the numbers to make them seem incredibly low to lull the investors into a false state of security-- by calculating anyone who makes a payment within the first 2 years of repayment as not in default. WOOT! They are fooling themselves and the investors! The bubble will burst--but the students will end up paying because of no bankruptcy protection. Greedy capitalists deceiving investors and hopeful students alike! Gah! Well, the system seems to work to give low income students a chance to attend college anyway. I'll take student loans over not being able to go to college at all any day. Will I have hell to pay with a permanent non-erasable debt? Or will I be able to bridge my loan debt into a career with a livable wage that will allow me to comfortably pay back my loan without starving or becoming homeless? There are lots more like me! Again--those default rates are nonsense! They do not accurately reflect the real number of defaulters and the massive growing numbers of struggling student debtors.
8. seamustheclassicist - May 06, 2010 at 04:15 am
They can always feel free to repo my education....oh wait! Gaining a college education isn't like taking out a loan for a car or house which shows the problem with big business getting into non-profit ventures (anything relating to the preparing and educating of young people is non-profit that is why young people put off and limit the number of their children.)
I wonder if I can sell my diploma on e-bay, "One University diploma, two years old, never used...$18,000 obo."