It’s a sign of the times. Foreclosures are up, bankruptcies are up. Unemployment is up. Incomes are down. It’s only natural that the rate of default on student loans is on the rise as well.
For example, this story from the StatesMan shows that the data for the last 3 years show more defaults on college loans.
More than one in five recipients of federal student loans who attend for-profit colleges default within three years of beginning repayment, figures from the U.S. Department of Education show.
To put this into perspective, that’s 20% of borrowers. The historic figure is 6.7% of all student loan borrowers, and 11% of for-profit school attendees typically default. For-Profit schools include trade schools and small campuses with traditional bachelor’s programs.
That’s a nation-wide figure.
Here’s a story on the number of federal student loan defaults spiking in New Jersey
The number of New Jersey college students who left school in 2007 and defaulted on federal loans nearly doubled over the past fiscal year, according to data released yesterday by the U.S. Department of Education.
That’s a jump from the typical 6.2% to 11.3% in one year! At for-profit colleges the rate was 25% of borrowers.
Things aren’t so great in Minnesota either, where Data shows 1 in 20 Minn. students default on student loans.
Number one on the list is Duluth Business University with a default rate of nearly 35 percent.
Almost 29 percent of students who borrowed student loans to attend Rainy River Community College defaulted on their loans.
The bright spot for Minnesota is that Minnesota’s public four-year colleges have an average default rate of only 3%.
And in South Carolina, Allen University has highest student loan default rate: 26% of student loan recipients who went to Allen University and whose first loan payments came due between Oct. 1, 2006, and Sept. 30, 2007, were in default by Sept. 30, 2008.
None of this should bee surprising. College costs have been skyrocketing and far outpacing inflation and incomes for decades now. And double digit unemployment doesn’t help any either. When faced with a choice between paying the rent, groceries and student loans, the rent student loan payment will always lose out.
Maybe this will provide incentive for some pressure on colleges to lower their costs, though I doubt it.
These are some really telling numbers. Tuition prices are definitely much too high especially for private universities. Many people earning a good income are still paying off their student loans well into their 40′s. I think there really needs to be more attention payed to tuition and loans for students.
Jeff,
I completely agree. I think much of the problem with tuition prices is that students get more and more financial “aid” and grants from the government, so the universities are free to keep hiking tuition year after year. By the time the students (and in many cases, their parents) realize how long it’s going to take to pay off all those loans, the price has skyrocketed to where it seems like not such a bad deal, when in reality, 15-20 years to pay off the loan is way too long.