Wednesday, July 14, 2010

Government Vastly Undercounts Student Loan Defaults

Default rates on student loans are higher than recent federal government estimates, according to this article in the Chronicle of Higher Education.

"According to unpublished data obtained by The Chronicle, one in every five government loans that entered repayment in 1995 has gone into default. The default rate is higher for loans made to students from two-year colleges, and higher still, reaching 40 percent, for those who attended for-profit institutions."

"By any measure, for-profit colleges account for a disproportionate share of student-loan defaults. Two years into repayment, 11.9 percent of borrowers who attended for-profit colleges have defaulted on their federal loans, compared with 6.2 percent of those who attended public colleges and 4.1 percent who attended private colleges, according to provisional data that the Education Department released in February. Three years out, for-profit colleges' default rate has nearly doubled, to 21.2 percent of borrowers, and the gap between the sectors has widened."

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