Bankruptcy

Undercount of Student Loan Default Rates

By Bob Lawless

From Kelly Field in today's 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According to unpublished data obtained by The Chronicle, one in every five government loans that entered repayment in 1995 has gone into default.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.

These numbers are much higher than the official government statistics that track student-loan defaults only in the first two years of payment. The default rates become very high over a 15-year window. For example, over a 15-year window, the default rate is 31% for loans made to community-college students. I highly recommend reading the full article, which provides much more detail and an extended discussion of default rates at for-profit colleges.

Full post as published by Credit Slips on July 14, 2010 (boomark / email).