Congressional Issues

High Default Rates for Student Loans

More than one in 10 student borrowers whose loan repayments came due in fiscal 1995 missed payments for at least six months, the Education Department reported yesterday.

  • The default rate for 1995 was 10.4 percent compared to 10.7 percent the year before.

  • The all-time high was 22.4 percent in 1990.

  • The default rate for borrowers at four-year and two-year universities and colleges edged up in 1995, while the rate for grads of private four-year institutions increased from 6.3 percent to 6.9 percent.

  • For graduates of such institutions as barber, beauty and technical schools -- which typically account for a high percentage of loan losses -- the rate dropped one percent to 20 percent.

The Education Department believes the improved statistics are the result of a harder line against defaulters. The department has garnished wages and income tax refunds, and has dramatically increased the number of lawsuits it files against student defaulters -- from 200 in 1995 to 25,000 in fiscal 1997.

Nearly 200,000 borrowers attending more than 7,600 schools were in default as of October 1, 1996, the report said.

Source: Associated Press, "Student-Loan Program Losing a Lot Less," Washington Times, November 13, 1997.

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