College Students Defaulting on Loans at Record Rate
Sadly, this news isn’t surprising given the extraordinarily high unemployment for college grads.
Meghan Hoyer of USA Today reports.
10:57AM EST September 30. 2012 – Student loan defaults have risen for the sixth straight year, as students from traditional non-profit universities have an increasingly difficult time paying off their college debt.
Numbers released by the Department of Education Friday show that of the 4.1 million borrowers who began making payments in late 2009 and early 2010, 9.1% defaulted within two years, up from 8.8% the year before.
“Student loan defaults still continue to plague too many borrowers,” said Debbie Cochrane, research director for The Institute for College Access & Success. “The numbers are distressing, and they needn’t be so high.”
Experts credited the combination of skyrocketing student debt, the poor economy and a lack of borrower education for the increase. Unlike previous years, when default rates rose because borrowers at for-profit universities were having trouble paying off their loans, this year’s rise was attributed to borrowers who attended more traditional non-profit public and private universities. Public school borrowers defaulted at a rate of 8.3%, up from 5.9% just four years ago.
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