According to the latest numbers from the Dept. of Education, there was a sizable increase in the percentage of college students who defaulted on their student loans in 2009.
Over all, the student loan default rate went from 7% in FY 2008 to 8.8% in FY 2009. Defaults from students at private colleges jumped from 4% in 2008 to 4.6% a year later, while the default rate for students at public schools increased from 6% to 7.2%. For-profit schools had the highest rate of default and the most dramatic increase, soaring from an already high 11.6% to 15% in a single year.
Says U.S. Secretary of Education Arne Duncan:
These hard economic times have made it even more difficult for student borrowers to repay their loans, and that’s why implementing education reforms and protecting the maximum Pell grant is more important than ever… We need to ensure that all students are able to access and enroll in quality programs that prepare them for well-paying jobs so they can enter the workforce and compete in our global marketplace.
The Dept. of Education and the White House have taken steps in recent years to make it easier to repay student loans. For example, Income-based repayment plans cap monthly payments at an amount based on income and family size.