Default Rate Rises for Student Loans, U.S. Government Reports

[Pale Blue Dot]

Source: Bloomberg

Student-loan default rates for people who recently left school rose to 6.9 percent from 5.2 percent a year earlier as a deteriorating economy weighed on borrowers, the U.S. government said.

The rise, a preliminary figure that’s sent to schools for possible revision, was reported by the Education Department in a Web posting March 26. The rate is based on borrowers who were to begin making repayments between October 2006 and October 2007, and who fell at least nine months behind by late September 2008.

Almost 232,000 of those borrowers entered default, a 13 percent increase from the previous year and a jump of 43 percent from two years earlier, the department said.

The new rates “are from the early recession period, so that is the likely explanation for the increase,” Robert Shireman, a senior adviser to Education Secretary Arne Duncan, said in a statement.

The default rate for those obligated to repay private loans backed by the federal government was 7.3 percent, and for those repaying loans issued directly by the government was 5.3 percent, the department said.

Read more: http://www.bloomberg.com/apps/news?pid=20601087&sid=aYEYBR8jmVpg

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I teach at a pschool in Hartford. In April we'll be hearing about how our inner city senior class - 82% of whom are going to a four-year college - are faring with grants and student loans. I'm very concerned for them.

[bamacrat]

1. I am currently repaying my student loans I need a bailout.

If college didnt cost so much it wouldnt be so bad it cost me over 6000 dollars a year just in tuition to go to UA and Im an in state student.

[Life Long Dem]

2. This bubble is allowed to exist.

And students are allowed to contribute to bailing out the banks. The Sallie Mae's anyway.

Long live the bubble! Another good area... green tech...