650,000 Student Loan Borrowers Who Began Repayment In 2011 Have Defaulted On Federal Loans

Career College Central Summary:

  • Maybe more consumer are realizing the long-lasting negative effects that can come from not repaying their student loans.
  • Or maybe not. we don’t really know why, but we do know that the number of borrowers defaulting on some federal student loans is decreasing.
  • A new report from the Department of Education found a drop in the percentage of borrowers who are defaulting on their student loans in the first years they are due.
  • Of the more than 4.7 million borrowers who began paying back their student loans in 2011 only 650,000 have defaulted.
  • That number represents 13.7% of borrowers, a full percentage point less than the default rate of those who began repayment the year before. In all, the default rate dropped for each of the three main college sectors.
  • The default rate was 12.9% for students at public schools; 7.2% for students at private, nonprofit schools; and 19.1% for students at for-profit colleges.
  • Any school with a default rate of 30% or more for three consecutive years, or a 40% rate for one year, faces the loss of access to those federal programs.
  • This year, the Department identified 21 schools that had default rates high enough to lose eligibility for federal aid programs.
  • Of those schools, 20 were from the for-profit sector. Each school will have an opportunity to appeal the loss of funds.

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